In fintech there are a whole host of companies trying to build scalable payments systems. According to EY, the biggest market in UK fintech is payments, at approx. £8bn per year.
But payments is difficult. To make money, a new payment provider needs to scale quickly for the economics to work. This requires a proposition that is significantly compelling for both consumer and merchant as well as the various other players in the value chain. After all, payments work today. It’s not perfect by any means but it works.
First of all, you need to add value to a payment system to make a successful business out of it. We found that just doing payments is great, but it’s not good enough.
If you have the option of paying at a restaurant with your phone (via contactless) instead of your credit card, the difference is not huge: you still need to go through the process of asking for the check, viewing it, but instead of paying with your credit card, you’re paying with your phone. So your incentive to use your phone isn’t strong.
If you’re trying to create a compelling payment experience, which means trying to understand the full process, you need to understand where the ‘pain points’ are for the customer.
Our technology, for example, is integrated into restaurant apps to allow customers to pay for the entire bill amount or split the bill with others via Apple Pay, PayPal or a registered card on a MyCheck account, without waiting for staff. It also enables sophisticated incentive and loyalty programs designed to personalize the dining experience for customers.
So in our case, when a customer sits in a restaurant, they might want to check the menu, they can do that through the restaurant’s app, powered by MyCheck. When a customer wants to redeem his coupons or offers or participate with a loyalty program, you can do that through the app. No messing around with paper vouchers or loyalty cards. Accumulation and redemption is automatic.
And finally when you want to pay, you don’t need to ask for the check because the MyCheck platform is integrated, so you can pay and even split the bill using your smartphone.
With some of the brands that we’re working with, the focus of those chains is increasingly to establish a relationship between them and their guests.
There’s a lot of competition, and everyone understands that it’s not just about the food, it’s about the experience.
By trying to leverage the capabilities of the smartphone, you can create an engaged but unobtrusive relationship with your guests.
You’re not disturbing them; you’re not sending them emails all day long. Instead you’re actually learning their habits and personalizing the app experience to them.
So imagine getting a 20% off generic offer from a chain you like. Compare that with if you get a promotion saying: “Hey, we know that your favorite item is calamari, come and eat with us, you’ll get your calamari for free.”
It’s basically the same cost for the restaurant (if not less in many cases), but the engagement and the relationships are much deeper.
When it comes to monetizing an app, it depends on what the app is trying to achieve. Most of the payment apps are not generating revenue from consumers; the merchant is paying them.
As a result, because there are so many platforms on the market, you have to prove the value that you’ll be adding to a business for them to engage with you.
The interesting thing about MyCheck is that we’re partners with the chains that we’re working with, so their success is our success.
It isn’t difficult to persuade consumers to use the app for the first time.
The challenge is how you make them loyal, how you drive repeat visits while also providing a better customer experience.
Our data suggests that once a user uses the app more than two times they get hooked. You have to somehow convince them to use it twice and then they get used to the experience and then they like it.
It’s okay to build this basic ‘punch card’: “10th time and you get your burger for free” – but if you really get to know the customer and build a smart loyalty program, personalization is what’s going to make them stay and keep on using the app.
For the merchant it’s the same thing. It’s easy to convince them that they need an app, but then as they move forward they need to work with it, they need to create a loyalty program, they need to have budget for it, they need to work on branding. If they don’t see value they will give up.
We can leverage the fact that a business is part of a chain to add value. Most people, even if they’re going to a massive chain like Prezzo, they’re usually going into specific locations, the shop that is near their station or their office. They go there, the manager knows them, and they get the VIP treatment.
If this person goes out of the city to a different branch of the same chain, you want them to feel like they’re a VIP again. There’s no way other than leveraging data and being smart with an app or with a loyalty platform to identify that a particular customer is a ‘VIP’.
If a customer goes to a different branch from their usual restaurant and they still get the same VIP treatment, then they’re in love with the chain.
I think the most important thing is not to have a generic loyalty scheme, where no matter who you are, what kind of brand you’re trying to push, you have the same visit 10 times get the 10th for free.
Instead, creating a personalized experience for each user, while adding value for both the customer and the merchant is key to growing a scalable payments system.