Card issuers have long feared that third-party mobile wallets would erode their brand power by rendering them an invisible part of the payment process — and issuers like Barclays and TD Bank are finding ways to fight back.
As mobile and e-commerce companies set an expectation of immediate service, banks are rising to that challenge by providing card rewards and services in real time. This could be by allowing consumers to get rewards from the moment they apply, or by setting a higher standard for what can be done for those who apply in a branch.
"The risk is having other brands stand in front of the card issuer brand, which becomes commoditized, so it’s really critical to make your brand stand out for utility or other purposes,” Sanjay Sakhrani, managing director with the investment banking firm Keefe, Bruyette & Woods, said at SourceMedia's Card Forum last week in Miami.
At Barclays, for example, travelers who apply at a kiosk in the airport for the Barclays American Airlines AAdvantage Aviator card can get some benefits on the spot, including the first bag checked free and preferred boarding for that day's flight, according to Bob Highland, managing director of business development and payment networks at Barclays.
“We’re using mobile and digital channels to instantly deliver some credit card benefits the minute people sign up,” Highland said.
Barclays also is leveraging the digital channel to recruit customers with its Uber Visa card that launched last year, handling enrollment directly from the Uber app, where each ride generates rewards at an accelerated rate. Through a new partnership with PayPal, Barclays U.K. customers can manage their PayPal balance from within the Barclays app, and U.S. customers may soon be able to redeem credit card rewards at merchants that accept PayPal.
Because of these moves, Highland said he isn’t too worried about the brand vanishing within third-party apps or becoming generic one of many checkout page options. “Banks are getting better at provisioning cards and consumers will turn to specific cards for the values they offer,” he said.
TD Bank is battling invisibility by marketing credit cards directly to customers through basic channels including the company's network of 1,300 U.S. locations, said Julie Pukas, head of U.S. and merchant services.
"We're not worried about becoming invisible because we're still acquiring the majority of our credit card customers through our branch network, where we see a lot of success and synergies," she said.
TD's small-business customers with merchant accounts are another lucrative source of credit card revenue, Pukas said.
"The data shows that when we have a credit card customer who also has a merchant account, their deposits with us are higher, and the customers stay with us longer," she said.
Customers who receive a credit card through TD Bank's in-branch instant-issuing system also tend to have longevity, Pukas said. The bank began instantly issuing EMV-chip cards in its branches about a year ago, and it informs tellers when customers have been prequalified to receive one of those cards.
"We send through the application in real time, we get a real-time response from the credit bureau, [and] if the customer is approved, within 10 minutes they can actually walk out of the store with a live EMV chip, and it's an embossed card," Pukas said. "We educate them right there on how to use their card across channels."