The future: One tap on your phone

Loyalty schemes can be brilliant – shop at your favourite stores and get discounts, collect rewards and get special offers – but they can also be a pain.

You stand at the checkout, holding up the queue, trying to extract the right card from your wallet – and it’s a mixed bag for merchants too: loyal customers spend more, and their shopping patterns provide valuable data insights, but schemes can be expensive and slow down transaction times.

Recently there have been some major shakeups in New Zealand’s loyalty schemes, such as the announcement that Countdown’s Onecard and the AA Smartfuel programmes are soon to be wound up. It's an indicator that the loyalty landscape in New Zealand is shifting, as merchants assess how they can improve their schemes and make them more efficient.

Could the whole loyalty interaction be faster, easier and more convenient? Yes, according to Worldline which is introducing technology that can integrate a loyalty scheme with a debit card to create a single-tap payment and loyalty transaction.

It all starts with a great user experience for customers, where a contactless digital debit card transaction allows shoppers to pay via debit with a single tap. Merchants also benefit, as they would pay much lower transaction fees compared to a scheme debit card.

Once set up to pay with contactless debit, customers can opt into loyalty schemes that register the purchase with the same single tap.

“There’s real value in a single tap transaction,” says Bruce Proffit, Chief Sales Officer for Worldline.

“The system recognises your payment card at the supermarket, for instance, and processes your loyalty rewards as part of that single tap. It removes all that the friction at checkout: the fumbling, the ‘Shoot, I don’t have my card,’ and even the time taken opening up a separate loyalty app.”

Highly tailored marketing 

Traditional loyalty schemes, which have tended to focus on collecting points, are evolving into more complex tools for building loyalty and delivering a better customer experience.

“We’re seeing loyalty programmes move away from the old-style schemes where you simply redeemed points for toasters, kettles and magazines, which felt like you were getting something for nothing,” Proffit explains.

“Today, loyalty schemes are no longer just about collecting points – they are becoming omnichannel experiences.

“For example, when I pay for something, my spending is recognised and I get tailored offers that match my typical spending or my personal interests. So, if I’ve only ever bought cat food, the merchant won’t send me a promo for dog food.”

He says this is part of a larger shift toward hyper-personalisation, where merchants and loyalty programmes use data to add genuine value for shoppers with tightly targeted promotions and experiences. It can also provide an additional revenue stream, as retailers can understand and monetise valuable insights about their customers.

“Let’s say Coke is launching a new low-calorie product. A supermarket might be able to identify 300,000 Kiwis who have recently purchased diet soft drinks. The supermarket could then send out a two-for-one offer on the new product, paid for by Coca-Cola, specifically to those people.”  

“The supermarket hasn’t sold or shared the customer’s personal data, but the purchase behaviour insights can potentially be used to generate some extra revenue.”

The Worldline contactless card is delivered through your banking app, and data is only ever shared with permission. The same would apply to any loyalty scheme. You would need to opt into a scheme and agree to share the spending data and information to a similar level to that which it currently collects.

“Many of us don’t bother to find our cards for a small transaction or when we’re in a rush,” says Proffit.

“A debit-plus-loyalty option would collect every purchase in-store, which would give customers more opportunities to earn rewards and provide merchants with spending data they’re currently missing out on.

“Contactless debit also has a much lower merchant transaction fee when compared to scheme credit cards. Adding a loyalty scheme to the transaction would incur an additional cost for each payment made by a participating member. This means that the cost scales up for users. Some large merchants may also be able to pass the costs onto their loyalty scheme provider.”

Retailers keen

A low-cost, one-tap payment solution is a natural fit for large-scale retailers who are currently absorbing high fees for credit card payments and the costs of physical loyalty cards – in both dollars and time spent at checkout.

The combination of reduced costs, shorter processing times and better customer experiences are already proving appealing, with several nationwide retailers in discussion with Worldline about adopting debit plus loyalty as soon as the technology rolls out. At this stage, contactless debit looks likely to be available from early 2024, and the loyalty add-on may launch simultaneously.

Although it’s a great match for the big guys, Proffit also says the little stores won’t be forgotten: “Your corner coffee shop is probably going through a lot of physical cards, especially when so many of us have three or four cards in various places, each with one or two stamps.

“Contactless debit is for everyone and adding loyalty to the transaction will work extremely well for a wide range of businesses.”

Whichever way you look at it, contactless is going to bring all of us – shoppers and retailers – a lot closer to a future of payments that is simpler, safer, and more in sync with our lives.