7 key learnings from PayThink 2019

When the payments industry's decision makers gathered in Los Angeles at SourceMedia's annual PayThink conference, certain topics dominated the discussion.

Many talked about real-time payments, balancing their ambitions against the staggered rollout of the technology in the U.S. Others were more focused on encouraging their customers to make the leap to digital payments — and enjoying the massive bump in interchange revenue that could come from making one's card the default choice in a retailer's digital wallet.

Ben Soccorsy, senior vice president and head of digital payments at Wells Fargo.

Making payments too seamless?

Customers want more seamless payments, but that creates the possibility that they will lose control of their spending.

"There is definitely a desire to make payments simpler, more seamless, [and] obviously with anything like this, I suppose there's a risk that we could go too far," said Ben Soccorsy, senior vice president and head of digital payments at Wells Fargo. "I don't lose a lot of sleep over that."

Wells Fargo is already working to help consumers rein in their unintended spending. Its online control tower, launched 11 months ago, provides visibility into recurring payments and subscriptions.

"It's an eye-opening thing to see, for all your debit and credit card transactions, things you may have forgotten that you may have subscribed to," Soccorsy said.

To fuel this visibility, Wells Fargo also struck a data-sharing deal with Plaid to give it a direct API connection. Previously, Plaid used screen-scraping to obtain data from Wells Fargo customers.

Get the message

The commonly anticipated use case for real-time payments is person-to-person transfers, and HSBC announced an update to serve this use case at SourceMedia’s annual PayThink conference. HSBC’s Global Transfers Friends and Family now allows real-time transfers to the U.S., with the goal of later adding the ability to send funds from the U.S., according to Carolyn Criscitiello, HSBC’s head of digital payments.

But even this service doesn’t reach the full potential of real-time payments. “There is no doubt the payment systems that we have today are falling short for today’s customers,” Criscitiello said.

The goal is to deliver data in real time alongside the payment. Customers want to know that the wire they sent to purchase property was received, or that the small-dollar transaction on their debit card statement is legitimate.

“Customers are time starved; they don’t have time to go checking their bills all over the place,” Criscitiello said. “They don’t have the time or the luxury anymore to be able to deal with today’s payment system.”

HSBC already supports The Clearing House’s Real Time Payments and Mastercard MoneySend. “What’s next up is sending and value-added messaging,” Criscitiello said. “I think value-added messaging is the real game changer.”

Going global with real-time payments

Visa has learned through experience that there are unforeseen opportunities in real-time payments. One of its biggest successes is in the gig economy, where ride-sharing apps use Visa Direct to pay drivers as soon as rides are complete.

Some of the anticipated barriers to adoption aren’t as high as some might believe, according to Gaurav Gollerkeri, head of Visa Direct, during PayThink.

One ride-sharing client saw 70% of its drivers opt to use instant payout in the first eight months the option was available, he said. This service can be used by anyone with a debit card (not just those on the Visa network). This makes Visa Direct nearly ubiquitous in the U.S., but it doesn’t have that reach on a global scale.

That’s where Earthport comes in.

Visa bought Earthport in May for $320 million, greatly expanding the card network’s capabilities in cross-border payments.

Earthport is “a network of networks,” Gollerkeri said. “As we look around the world, we reach about 50% of humanity with cards today, and the goal is to try to reach everyone who’s banked in some way. Earthport nearly doubles that reach.”

Gollerkeri estimates that with Earthport, Visa has 90% to 95% coverage of the global banked population.

“Markets which are not card penetrated but are banked, we now have an option to get there,” he said.
Braden More, executive vice president and head of partnerships and industry relations at Wells Fargo

Zelle's path for growth

Zelle, the bank-backed P2P network operated by Early Warning, announced in July that it handled 171 million transactions — totaling $44 billion — in the second quarter of 2019.

But it still hasn’t branched out to other mainstream uses such as point of sale payments.

Paul Amisano, senior vice president of digital and payments strategy for BB&T, says this isn’t about consumer preference for credit cards. Rather, it is consumer preference for the fraud guarantees they get with their card.

“That consumer protection piece is really important,” he said. “That’s one of the reasons right now that you don’t see Zelle at the point of sale.”

Braden More, executive vice president and head of partnerships and industry relations at Wells Fargo, agreed. “There are clear commercial terms with what happens when you’re disappointed with your [card] purchase,” he said.

For a new, instant payment method to take spending away from cards, “It’s that challenge of: How do you create those fraud protections? How do you make sure that people feel like they’re confident to spend?” More said. “At the end of the day, nobody actually cares about the payment, sadly. It’s part of the process of getting what they want.”
Steve Streit, Green Dot's chief executive
Steve Streit, Green Dot's chief executive.

Going big

Green Dot has worked on major retailer products such as Apple Cash, Intuit's Turbo Card, Walmart's Money Card and the Uber debit card, and the lesson it learned from this experience is that there's no room for mistakes.

"We do very well with enterprise-sized partnerships because we've been beat into shape over many years with Walmart," said Steve Streit, Green Dot's chief executive. "They make you a better company, or you don't survive."

It's part of why Green Dot never jumped on the bandwagon of celebrity-endorsed prepaid cards, an era where names ranging from the financially savvy Suze Orman to the flashy Kardashian sisters were attached to the product.

Green Dot does work with social media influencers, but it sees them as an audience rather than as spokespeople.

"Money is a serious issue," Streit said. "It's not a gimmick."
Amazon fulfillment
A worker packs a box at the Amazon.com Inc. fulfillment center in Passo Corese, Rieti, Italy, on Thursday, July 26, 2018. Amazon reported a record second-quarter profit of $2.53 billion, or $5.07 per share. Photographer: Giulio Napolitano/Bloomberg

Making Prime Day pay

Vibrant Credit Union in Moline, Ill., sees great value in converting its members to mobile and digital payments. And days like Amazon Prime Day can be critical for its digital wallet strategy.

Vibrant has learned that members who link a debit or credit card to a mobile wallet such as Apple Pay and Google Pay make more payments. Debit card users with a digital wallet make 55.8 payments a month, versus 32.7 for the average debit card user. When it comes to credit cards, digital wallet users make 19 payments a month, compared with 8.2 for the average card user — more than double the activity.

The $800 million-asset credit union is trying to increase digital wallet use any way it can. An increase to just 5% or as high as 10% of digital wallet penetration makes a huge difference in revenue.

Piggybacking on Amazon Prime Day is a low-cost way to deepen digital relationships.

“To have that card front of wallet on Amazon is really critical because once it gets there, at the end of the day it’s difficult for people to make the decision to move it,” said Steve Ducey, the credit union's chief experience officer.

On Amazon Prime Day, when Amazon was heavily promoting its own issuing partners, Vibrant sent an offer to its members: If they do their Prime Day shopping on Vibrant’s card, they will enter those shoppers into a contest and pay off one member’s Prime Day purchases. Once the promotion was over, the credit union wound up paying for $70 worth of purchases from the winning member.

“It didn’t cost us a lot but it gave us a really good excuse to have constant communication around a digital wallet,” Ducey said.
Southwest check in
A traveler uses a Southwest Airlines Co. self check-in kiosk at Oakland International Airport (OAK) in Oakland, California, U.S., on Friday, Jan. 19, 2018. Southwest Airlines Co. is scheduled to release earnings on January 25. Photographer: David Paul Morris/Bloomberg

Learning from experience

Charlotte Norton, senior vice president of central operations for Randolph-Brooks Federal Credit Union in Live Oak, Texas, described an experience that motivated her to improve her credit union's reissuance capabilities.

An executive at the credit union had lost his wallet when he left it inside his truck, which was stolen. She was able to block his card that Sunday and initiate the process to issue a new card and get it in his hands by Tuesday.

“I was so proud of our team,” Norton said. “We got it all set up and I was extremely excited — until Monday.”

That’s when the executive came to work and told her that the issuer of his Southwest Airlines card was able to deliver a replacement card digitally into his mobile wallet.

“And I went, ‘Darn,’ ” she said. “He popped my balloon.”

That episode motivated the Randolph-Brooks to add digital reissuance capability to its debit card platform. The credit union makes a point of learning from its employees’ experiences.