Online payment issue needs to be solved

Walk into a Nordic brick and mortar retailer, and it is usually simple to split a purchase among different payment instruments. You can pay part with cash and part with card, or split the amount among multiple cards. But move online, and you are forced to complete the entire transaction on a single instrument (one card). 

This can obviously be an issue when a customer doesn't have enough funds in a single account, but becomes especially grieving when paying with a scheme-based prepaid card. Unless the prepaid balance matches the exact amount of the shopping cart, there will either be breakage on the transaction – or no payment made at all. 

Splitting an e-commerce purchase across multiple cards shouldn't be that difficult from a technical point of view. It can be done in the brick and mortar environment, after all, and according to fellow industry professionals, e-retailers across the pond can already do it. Nordic payment service providers are hereby encouraged to step up and look into this issue. It could result in a competitive advantage. 

This post is an extract from MACAW Payments Bulletin 62: Payment issues that need to be solved.

The year m-payment will take off...

“This is the year mobile payments will take off… Really!” Really? We hear this pitch every year, but we have yet to see actual take up reach the levels forecasted for the last five to ten years. 

Maybe it’s time to evaluate the actual benefits of mobile payments to merchants and consumers, and which forces are driving adoption forward – and also those holding it back. This applies both to proximity payments and remote payments. 

There are literally hundreds of European companies claiming to be in the mobile payments business (whatever they mean by mobile payments, another story.), but most evidence we've seen points in the direction of gradual evolution rather than an overnight revolution. 

In the end it all boils down to actual benefits for consumers and merchants from adopting mobile solutions compared to their existing options. Mobile has to be cheaper, faster, easier, more accessible – and/or just as secure as a bank/card transaction. Ideally, mobile payments should give consumers something extra on top – like a discount, coupon or gift card. If not, what incentive do they really have to switch habits? 

Why banks fail at analytics

Bankers love numbers and poking their heads in spreadsheets. That’s why we find it rather odd that so few banks are really good at analytics. And even fewer implement their analytic findings to boost profitability. How is that even possible in an era when data is so abundant and revolutionizing industry after industry, from books to airlines?

The latest MACAW Bulletin gives you not one, but six reasons to why banks fail at analytics. These are observations from working with banks in countries across five continents. And the findings are surprisingly consistent. Maybe your bank is the exception, and you really are great at analytics, but odds are you will recognize your bank in some of the following.

Locked in Old World thinking

Look at what Facebook, Google, Amazon and Apple are doing with IT, analytics and rethinking business models. They have revolutionized everything from web hosting and search engines to music, books, and even payments. They are capitalizing on information, analytics and performance optimization. Banks are watching from the sideline. In the end it will be too late to be proactive to change. 

No culture for innovation
Banks attract many clever people, but they tend to be economists, accountants and lawyers. When did you last attribute ‘innovation’ to any of these professions? Sadly we find few truly innovative marketers, business-wise engineers, or entrepreneurs working at banks. And when the occasional brightly shining star does come along, she tends to fight an uphill battle for gaining acceptance at management level to challenge conventions.

No statisticians
Among the numbers loving bankers, where are the statisticians? One might find the occasional number cruncher with a statistical degree working in risk management at a bank, but they are surprisingly few and even rarer are those allowed to participate in business development processes.

Legacy systems
Mature banks will groan when you say 'we need this data'. The data is spread across different systems, and what’s worse, they’re legacy systems. Often it is a patchwork of spaghetti that almost no one wants to go near, and even fewer know their dark, inner workings. But legacy systems are not all to blame. A lot of it has to do with attitude.

Other reasons why banks fail at analytics:

• Wrong KPIs
• Risk adversity

This blog post is an excerpt from MACAW Card Bulletin 54: Why banks fail at analytics. Purchase your subscription today to obtain the full article. Contact sales@macawresearch.com. 

Mobile Payment Devices

Square has paved the way for a new category of mobile card acceptance devices. These devices, which typically plug into a smart phone or tablet, enable consumers and small merchants to accept card payments. New entrants are popping up with increasingly smarter solutions, and many banks are wondering what is going on and how to respond. 

The number of companies offering devices to transform a smart phone into a card acceptance device is increasing rapidly in the US and across Europe. Square, Intuit, iZettle, PayPal, mPowa, Elavon, SumUp, ChipCap, and a handful of other companies all apparently want a piece of the pie that acquirers have previously ignored. 

As per June 2012, Square has enabled no less than two million individuals, small businesses, NGOs etc. to accept card payments. These segments that could previously not justify the cost of buying or renting a payment terminal with an acquiring agreement are willing to pay a merchant service fee of around 2.75% as long as the card acceptance device is free or low cost to obtain. 

In its simplest form, the card acceptance device is a small card reader that plugs into one of the ports on the smart phone or tablet (e.g. microphone jack or USB), or it can connect via Bluetooth or NFC. The user interface is delivered through an app downloaded typically through App Store or Google Play (for iPhone and Android-based phones respectively). Often the app supports manual card detail entry in the absence of a card reader, i.e. a CNP transaction, which also entails a higher merchant service fee (typically 3.5% + a fixed fee). US-based companies tend to only support magstripe transactions, whereas European ones either support chip or both. 

The majority of solutions involve the cardholder signing with his finger, i.e. signature. However, this appears to be a perceived issue with Visa Europe. Earlier this summer, iZettle which uses Chip + Signature was no longer allowed to handle Visa transactions outside Sweden. The reason provided was that the iZettle reader did not fulfill the Visa requirements for payment devices. SumUp, one of the latest entrants, claims to circumvent this issue by sending Visa cardholders a text message with a secure link, which they have to access to manually enter their full card numbers (which sounds highly cumbersome and probably is). (...)

This article is an extract from MACAW Card Bulletin #51. To access the full article and subscribe to the MACAW Card Bulletin, please contact sales@macawresearch.com. 

European Cybercrime

The European Commission recently released a special Eurobarometer report on Cyber Security. 26,700 people across all EU member states have reported their internet use, concerns and measures against cybercrime, including for online banking and buying goods and services online.

Around half of the internet users in the EU say they buy goods or services online (53%), use social networking sites (52%), or do online banking (48%). There is considerable variation in the online activities that respondents undertake in different countries.When using the internet for online banking or shopping, the two most common concerns are about someone taking or misusing personal data and security of online payments.

12% of internet users across the EU have experienced online fraud, and 8% have experienced identity theft. The majority of internet users in the EU (61%) are concerned about experiencing identity theft.

Internet users have changed their behavior in a number of ways because of security concerns. 37% say that they are less likely to give personal information on websites, while 43% do not open emails from people they don’t know. 51% have installed anti-virus software. However, more than half (53%) of internet users in the EU have not changed any of their online passwords during the past year.

24% of internet users access the internet through a smartphone, but most use a desktop computer (63%) or a laptop computer or netbook (61%), and 6% use a tablet computer or touchscreen.

Respondents in Sweden, Denmark and the Netherlands are more likely to be frequent internet users (83% accessing the internet at least once a day), to use the internet for buying things (80%, 78% and 76% respectively) or for online banking (87%, 87% and 84%). In these countries, respondents are also less likely to be concerned about being the victim of cybercrime.

Food for thought.

Mobile and online what?

MACAW is often asked about our opinions on online banking, mobile banking, mobile payments and digital wallets. Some people even use this industry jargon interchangeably to much confusion. So we always ask what people mean by these terms, and if they don’t know what to answer, we ask more specific questions. More often than not, people struggle to define what they are actually asking about. Maybe not so strange given the complexity of current day payments, so why not clean up the terminology a bit to reflect how the world is changing?

For example, is accessing your online banking facility through a mobile web browser defined as mobile or online banking (or both?). What if you substitute a mobile with another device such as an iPad? Is the term mobile payments reserved for non-bank payments conducted via mobile; what about remote vs. proximity payments; or whether or not the transaction involves a card account? See – it quickly gets complicated. Hence there is a need to define a common industry terminology, and that’s our goal. Let's begin with online banking and mobile banking.

The term online banking certainly made sense when it was introduced, and the browser on the computer was the only mode of access to the internet banking facility. But you can also access the online banking facility with a web browser on a mobile or other device. Is that mobile banking? Not in our book. A browser is a channel or mode of access irrespective of device. Redefining online banking as 'browser banking' is historically and technically accurate. Why retain an old world term when we can use the more precise term ‘browser banking’ which leaves less confusion?

Similarly we suggest replacing or supplementing the term mobile banking, which two device specific channels, SMS and Apps, are no longer reserved for mobile phones. These modes of access are available via other devices such as an iPad. Thus MACAW would suggest a channel-based rather than device-oriented terminology. We can substitute the term mobile banking with ‘SMS banking’ and ‘App banking’ to help clear up the confusion.

So let's abandon online and mobile banking in favor of browser, SMS and App-based banking. A channel/access mode approach removes some confusion and is device neutral.

Gamification

Gamification can be defined as “the use of game design techniques and mechanics to solve problems and engage audiences to generate desired behavior.” Gartner Group estimates that up to 50% of all companies will use gamification by 2015. Whether a bank wants to sell more products, increase card spending, educate their customers, or make their loyalty program increase retention by heightening customer engagement, gamification can help achieve these objectives.

Banking rewards are traditionally related to packaged accounts and credit cards. Customers with a certain asset size and/or number of products qualify for a packaged account, which typically grants lower fees and interest charges or added services such as concierge service compared to not having a packaged account. This does not really engage the customer, but builds a negative barrier to switching. Credit cards have traditionally relied on spending related rewards; in whether as flat or tiered cash back or point-based bonuses on spending.

Airline and fuel loyalty programs are traditionally tiered based on spending levels, and while there are certainly cases of customers that work hard to reach and maintain the higher tiers of these programs (e.g. going on “air miles runs”), this is not really a fun, engaging and brand-strengthening approach to building loyalty and desired customer behavior. So how can banks and cards be smarter than simply offer generic spend-based point rewards?

The first thing a bank or card program manager should ask is “What do we want to achieve”? Do we want to attract more customers, increase loyalty, cross-sell more products, increase a desired behavior, decrease an undesired behavior, educate our customers etc. Once we know, we can set objectives for our program and work to drive customers to those goals through fun and rewarding engagement using elements such as achievement points and badges, mini-games, leader boards, progress bars and other game elements.

To make card spending more interesting, one could give the cardholder achievement rewards for using the card in 5, 10 or 25 different MCCs in a certain period, at certain partner retailers, or for example in one or more different countries or continents. If the card issuer is facing fraud problems, educate cardholders by rewarding them with points for completing educational programs in the form of viewing instructional videos and then doing mini games such as quizzes. If we want to increase cross-sales, we could give new customers bonus points for signing up to new products, such as id theft insurance. These are just a few examples of how banks and card issuers can use gamification to drive desired behavior.

This blog post is an excerpt from MACAW Card Bulletin 41: Differentiation with Gamification. If you would like to subscribe to the MACAW Card Bulletin or hire MACAW to help your organization exploit the potential of gamification to reach your sales and marketing goals, please call +47 412 69 669 or e-mail post@macawresearch.com.

Retail Prepaid Management

Retailers worldwide are embracing prepaid gifting solutions, although their degree of sophistication and understanding of prepaid as an element of marketing strategy and execution vary greatly.

The majority of retailers might view gift cards primarily as a payment instrument, potentially with a fee to cover the cost of issuance and a small margin, and possibly some breakage (unspent funds) that can be claimed as revenue at a later point. However, this narrow view prevents retailers from realizing the true potential of prepaid.

For example, according to South-Africa based gift card provider DrawCard, South African merchants who switch from paper to plastic prepaid gifting experience anywhere from a 30% to 200% increase in sales. What is more, 61% of South Africans spend more than the face value of the card. Coupled with float, higher margin sales, and the potential for new customer acquisition, gift cards offer significantly more benefits than might be superficially apparent.

A retailer or service provider that grasps the economics of the gift card will make efforts to promote their cards actively in their in-store environments. The next step up from in-store promotion is incorporating gift cards into the overall marketing strategy of the company. There are many opportunities for issuing a prepaid card during interaction with customers and potential customers. For example, instead of giving a customer a cash refund upon returning a product, one can issue a prepaid card to encourage repeat visits and incremental spending. Prepaid cards can also be used as part of promotions. One example is replacing point of sale cash discounts with giving out a gift card of a certain value.

When a retailer or non-retailer has exhausted its options for self-promotion of gift cards, it is time to look beyond the physical outlet network and online sales channels. Enter the concept of third party prepaid distribution. A retailer with sufficient margins on its products should consider distributing its gift cards through other retailers’ stores, such as with Blackhawk Network.

Retailers and non-retailers that view gift cards as a category, rather than merely a payment instrument (or unspent funds to go into the bottom line at a later point), can significantly increase their sales revenue. Gift cards can be used to attract, retain, compensate and stimulate additional customer spending; but they cannot do so if they are in a drawer behind the till and not promoted.

Nordic Card Trends & Opportunities 2011-2012

Nordic Card Trends & Opportunities 2011-2012 is the anticipated sequel to our previous report in the Nordic Card Trends & Opportunities series published two years ago. Much has happened in the dynamic Nordic payments space in the economic downturn and recovery phases; and many new possibilities have opened up.

http://www.macawresearch.com/Reports/NordicCardTrendsAndOpportunities20112012_infopack.pdf

The report describes the development of the credit and debit card markets over the last three years and predicts the debit and credit spend values for 2011-2012 for Denmark, Finland, Norway and Sweden utilizing a historically accurate statistical model based on card payments and economic indicators.

Next, the report assesses the potential of the emerging Nordic prepaid card sector, including drivers and inhibitors to growth, and the size of the current market potential for both closed and open loop products. Nine different prepaid categories are assessed: Consumer gifting, Government disbursements, Corporate incentives & benefits, Payroll, FX & Travel, Fuel, Transportation, Remittance, and General purpose reloadable products.

Finally, the report presents 12 Trend articles, each which explores new card trends and opportunities in the Nordics. The topics revolve around modern card portfolio optimization, new prepaid channels and segments, social media and payments (including Facebook), mobile and contactless payments, and credit and debit trends including loyalty points and cash back. The articles are backed by facts, professional views and case studies.

For those readers who want additional information on a given topic, references to online resources such as blog posts, news articles, press releases, company websites and financial reports are provided.

We think you will enjoy the report and that it will help you see new ways to improve your business and tap into new revenue streams in an increasingly competitive card market.

Questions and sales orders can be directed to sales@macawresearch.com

PS: Grab the report info pack: http://www.macawresearch.com/Reports/NordicCardTrendsAndOpportunities20112012_infopack.pdf

Card Performance Optimization

Increased competition and uncertainty force banks to better understand their customers and what drives profitable card behavior. Card performance optimization will likely be a key European payment trend in 2011-2012.

Card Performance Optimization (CPO) is a common name for statistical methods for maximizing credit card profitability based on behavioral analysis and risk policies. CPO allows issuers to reduce credit loss ratios, reactivate inactive accounts, approve more customer applications, and help build revolving balances - in essence to stimulate profitable card behavior. The methods can also be used to cross-sell credit cards to customers with existing prepaid, charge and debit card accounts.

While highly developed in the US and UK, the rest of Europe is still in an early stage of CPO adoption. Interestingly, even European branches of US and UK banks have only to limited extent adopted the successful measures of their parent banks. The players leading the way in Europe are typically niche banks whose core competencies are in credit card issuing.

One of the key components of CPO is behavior scoring – basically speaking a risk scoring method based on customer behavior after the customer has been issued a credit card. Behavioral scoring based on actual card behavior supplements application credit scoring, allowing issuers to approve more credit applications and to dynamically reassess credit limits – and interest rates – based on the risk pattern the customer exhibits.

Depending on the card issuer’s objectives, CPO can be used to optimize card program features and card pricing structure to drive the desired card behavior needed to achieve set goals. For example, a card issuer that wishes to generate higher revolving balances on existing accounts can optimize fees and interest rates to stimulate cash withdrawals, which have a higher tendency to revolve than purchases. For an issuer that wishes to activate inactive cards, other measures are more suitable. The exact measures should be tailored to the desired objectives – or to maximize overall profitability for the portfolio. Interestingly, cardholders are far from rational, which can yield different results than first anticipated. This represents both a challenge and an opportunity – mostly the latter.

With increased competition and macro level uncertainties in many countries, there is a growing need for card players to understand what drives profitable behavior, how to better manage risk, and how to capture new and profitable customer segments. Different banks will have different priorities, but banks that do not implement CPO will likely ultimately lose market share. Even a sub-optimized card portfolio can be highly profitable compared to other banking products, but the difference in returns on an average compared to a great portfolio is substantial. Credit cards are a volume and data-driven business, and as the market saturates, performance optimization will increase in importance.

To learn more about Card Performance Optimization, and receive a FREE assessment of your card portfolio's optimization potential, please contact sales@macawresearch.com.

Nordic Card Professionals on LinkedIn

MACAW research invites all professionals with ties to the payments industry in the Nordic region to join our LinkedIn community. According to our members, the community is a great source for local and global industry news, discussions and to connect with new business partners and connections.

We also aim to provide that something extra that sets us apart from other LinkedIn groups. For example, the members of the Nordic Card Professionals group have received free issues of the MACAW Card Bulletin, our monthly card publication, and rebates for select payment conference events we have negotiated discounts with. In other words, we look for creative ways to add value for our 400+ community members. Membership is free of course.

To join the Nordic Card Professionals LinkedIn group, go to http://www.linkedin.com/groups?gid=2203368 and apply for membership.

Gift card kiosks

An evolving Nordic gift card market drives distribution channel innovation. In shopping malls, new machines are finding their way to high trafficked areas. The gift card kiosks reduce personnel costs and drive up card sales, and constitute an innovative channel for card distribution, especially in the business to consumer market.

The business case is simple. A kiosk has the potential to reduce the cost of issuing gift cards considerably compared to a physical employee. The kiosk is quicker, reduces queues at other points of sale, frees up personnel time, and it drives up sales.

Kiosks also represent opportunities beyond the core functionality of selling cards. A printed receipt represents a potential marketing channel. For example, while the card payment is being processed and the card dispensed, ads for promotions at select retailers can be displayed.

For gift card kiosks to be an economically viable option, card sales volumes are critical. Major shopping malls, hypermarkets and other large format retailer outlets are eligible destinations with many visitors. It is also conceivable to distribute an open loop product through card kiosks in other high traffic locations, such as train stations. Despite these opportunities, kiosks are likely to remain a niche channel.

This post is an extract from an article on gift card kiosks in MACAW Card Bulletin issue 27 - Gift Card Kiosks. To subscribe to the MACAW Card Bulletin, please contact sales@macawresearch.com

Amazon + Facebook

Earlier this week, Amazon announced a move towards socializing online shopping. A new application will allow Facebook users to integrate information from their Facebook profiles with their Amazon accounts.

So what does it do? In short, Amazon shoppers will be able to see recommendations from their friends on Facebook. It also will alert them to upcoming birthdays and suggest gifts from Amazon based on friends' interests and preferences from their Facebook profiles.

Does Facebook see Amazon purchases? No. Amazon states it will not share account information with Facebook, so Facebook will not receive any information about a user's purchases at Amazon.

Does Amazon see Facebook activities? Yes, but only profile information that is publicly shared on Facebook. Amazon will not scrape non-public information from friends' profiles. Meaning the application will only provide suggestions for those who are open-minded about sharing personal information to anybody online.

From a commercial perspective it is clear to see the benefits of one major online player having access to your activities on another major site. Whether users will be comfortable is another matter. If the integration is perceived to have value for the consumer, it will likely be welcomed. There is no doubt Amazon can drive up sales from the integration; the question is whether users are being compensated sufficiently for allowing them to use their data.

Is the utility in seeing friends' favorites and tips for their birthdays worth it alone, or is something more required, e.g. points, rebates, special promotions or other benefits - paid out in Facebook Credits for instance?

Payments in Norway

The Bank of Norway recently published its much anticipated annual report on payments in Norway, providing 2009 statistics and updated information on the status of the Norwegian payment systems. MACAW research summarizes and comments.

CARD TRANSACTIONS

The growth in card use is strongly linked to household consumption. Despite economic turmoil, household consumption increased 2.3% in 2009, while the value of all card payments on Norwegian cards increased by 6.1% to NOK 645.9 billion. The total number of transactions grew by 8.4% to 1.28 billion transactions, equivalent to 246 transactions per capita in 2009, according to the Bank of Norway.

The growth in card value is a bit higher than expected based on analysis of historical data, indicating a continued strengthening of the position of cards vs. cash. This is also supported by cash withdrawal statistics, which reveal that ATM withdrawals on cards issued in Norway fell by 5.6% (6.2% domestic) if measured in no. of transactions and 3.0% ( 4.3% domestic) in value.

POS transactions on Norwegian cards used domestic and abroad increased to 1.18 bn (9.8%) with a value of NOK 486.5 billion (9.1%). Of this, the value of cash withdrawals at POS remained constant at NOK 27.8 billion, but the no. of such transactions continued to decline and was reduced by 2.9% compared to 2008.

DEBIT AND CREDIT

No. of debit card transactions in 2009 increased by 90.0 million (8.2%) year-on-year to record-high 1192.8 million, and value increased by NOK 30.4 billion (5.8%) to 556.3 billion. In comparison, the no. of credit card transactions increased by 10.1 million (17.9%) to 66.6 million in 2009, and card value grew by NOK 8.6 billion (14.8%) to 66.6 billion in total.

While credit cards saw two-digit relative growth in 2009, in absolute figures, the no. of debit transactions outgrew credit transactions by 9 to 1 and value by 3.5 to 1. Comparing the relative growth rates to previous years, both debit and credit cards experienced lower growth in 2009 than 2008, but higher growth than 2007. One conclusion drawn is there are no signs that Norwegian card use was adversely affected by the economic situation. Considering the development in household consumption, Norwegian card use even outgrew expectations.

An interesting side note is that the use of charge cards declined in 2009, after sporting several years of growth. One plausible explanation could be card issuers migrating charge card customers to more profitable credit cards. The decline could also simply be the result of increased competition from the increased number of credit card brands on the Norwegian market, with customers actively switching from charge to credit cards.

CARDS ISSUED

The number of issued cards increased by one million from 2008 to 2009, up from 10.6 to 11.6 million cards. 55.9% of cards were chip cards at the year-end of 2009.
For the first time, the number of debit features declined (down 0.9%) and ended at 11.8 million at year-end. Note that BankAxept and Visa debit are counted as two different features – so a great number of cards have two features.

Assuming the figures are correct, the no. of credit cards saw explosive growth, up by 1.2 million (26.9%) to 5.5 million features. The number of charge cards remained stable. In absolute figures, the growth in credit features is previously unparalleled in Norway. Compared to earlier years, 26.9% growth is very strong (vs. 1.0% in 2008, 20.9% in 2007, 22.9% in 2006). Apparently, the economic downturn did not deter banks’ determination to push credit cards, and 2009 also saw a number of new card concepts put on the market.

However, card turnover did not keep up with the growth in credit card features. Spend per credit feature dropped from NOK 13,370 in 2008 to NOK 12,095 2009, and the no. of transactions per credit feature fell from 13.0 to 12.1. This is a clear indication that competition is intensifying in the credit card sector. Still, the transactions and spend per credit feature were higher in 2009 than they were in 2007, so the size of the cake is also increasing – even if not as fast as the growth in no. of card features...

To gain access to the full article with illustrations and complete text, order your subscription to the MACAW Card Bulletin today. Contact sales[at]macawresearch.com or phone +47 412 69 669.

ID security

Last week, Oberthur Technologies hosted a seminar on ID security in Oslo, Norway. ID theft is a growing concern, and both government and corporate initiatives aim to create solutions to prevent ID theft from spiraling out of control.
A diverse range of speakers and subjects were on the agenda. MACAW research covered the event, and here we give you some of the highlights.

Eva Edwaldsson from Oberthur Technologies was first up and provided an introduction to current European initiatives on ID solutions, including the European Citizen Card project and biometric information schemes. A representative from Statoil inquired whether commercial players would be able to read complete biometric records. The Norwegian Ministry of Justice's stance was that this level of access would only be made available to government organizations and specifically border control.

The Data Inspectorate (Datatilsynet) presented excerpts from the Norwegian law on eSignatures and its skeptic attitude towards portal solutions for access to multiple government records for citizens from a single sign-on point, as well as tracking user behavior in electronic services in general. In essence, the latter boiled down to what the Data Inspectorate labeled as unnecessary identification, as well as logging; preferring this only be done at the point when a signature is required.

Ståle Ekelund, CTO at Norman, presented malicious code statistics. The number of pieces of malicious code have exploded, marked by an increase in so-called polymorphism, i.e. multiple instances of the same code building blocks, but with a different order or added components. In total, there were 22 million unique pieces of malicious code reported in 2009, and growing by approximately 1 million per month. Several of the speakers also pointed out that cyber crime has surpassed narcotics in revenue, and that ID theft is "big business with good returns."

Jan Sigurd Aarberg, VP Cards & Payments at DnBNOR, raised the question "Do we need payment cards?" and ran us through the history of payment cards in Norway. An interesting element from the presentation was that the mobile payments pilot with Telenor and MasterCard has been put on hold due to a lack of suitable mobile handsets. Also, is it banks' duty to provide identification to Norwegian citizens, and will it be in the future? It is a paradox that banks require a passport to issue a debit card, when one can use a debit card to obtain a passport.

One of the final speakers was Christian Meyer, project manager at idtyveri.info, who provided interesting figures on ID theft, such as 5642 Norwegians having reserved themselves against credit risk assessments at Dun & Bradstreet as per 31 December 2009. Mr. Meyer also referenced a survey, in which 5.4% of the surveyed Norwegians had been victims of one or more forms of identity theft. It is to be noted that the term ID theft was broadly defined and included being victimized in cases of public transport dodging, i.e. someone providing false record to inspectors and thus the fraud victim being issued a wrongful fine.

All in all, Oberthur Technologies provided a good mix of speakers and subjects, and we look forward to next year's event. Maybe we will see you there.

Blippy goes live

Blippy, the social media service that broadcasts your card purchases, has officially launched. It is less than a month ago that MACAW research wrote about Blippy being tested in beta by 5,000 users and shared our thoughts in the MACAW Card Bulletin. Now it's gone live.

While the key question Twitter answers is "What’s happening?" Blippy answers the question "What are your friends buying?" Users link a credit or debit card to a Blippy account, and when they make a transaction on the chosen card, the information is broadcasted in the form of a "blip."

Every "blip" uses the format "X spent Y dollars at Z", i.e. "Jon spent 20.99 dollars at Sport Club." For select merchants, such as iTunes and Amazon, a list of purchased items appears in the Blip as well. In other words, people can see other users’ purchases down to the product level – such as a song or book title.

People following a given user can comment on transactions. They can also see which other users purchased something at "place Z" and what other purchases user "X" has performed. Those who jump on the latest technology inventions, and especially those who already blog or micro blog about their purchases, could find Blippy appealing. Instead of manually typing an update on what they have bought, they can now automatically generate a message instead, thus saving time.

Blippy is controversial. The average user probably has transactions they want to keep private. In an article from the New York Times, co-founder Philip Kaplan was cited, saying that most cardholders have two or more cards. Only one card is intended to be linked to Blippy. In other words, users would only make their transactions known on a select card - a public card.

It remains to be seen whether Blippy will be a success or failure. If it does fail, it would be somewhat ironic as co-founder Philip Kaplan himself once operated a website that ridiculed the many failed web concepts back in the dot com era.

For social media enthusiasts who blog about their everyday purchases, Blippy might be just the thing to speed up their micro blogging. Be careful if buying a gift, though, as someone will see what you are buying - and you could risk being hounded if the price is too low or the gift is bought at "the wrong shop." Then again, maybe you don't want to buy those people gifts in the first place...

MACAW Card Bulletin Update

MACAW research has great news for everyone with a stake in the Nordic cards industry. We just shaved the price off our unique industry publication, the MACAW Card Bulletin, meaning more value for your money!

Effective immediately, group subscriptions have become cheaper. The change benefits both existing clients and new clients.

"We want the MACAW Card Bulletin to reach the largest audience possible. Business developers, product managers, marketers and channel managers can all benefit greatly from our unique service. We want as many as possible to have access, as innovation is fueled by spreading knowledge and ideas. Now our clients will get larger subscriptions at a lower cost," says Jon Østmoe, editor of the MACAW Card Bulletin.

"It's key to understand what the MACAW Card Bulletin really is," the editor explains. "It's not a news service, it's an innovation service. Think of it as part industry bulletin, part workshop. Local experts provide you with concrete ideas, inspiration and timely insights that can improve your business. The potential return on investment is big, and no one else offers a similar service."

TIP: You can get 12 months (12 issues) of the MACAW Card Bulletin for as little as 180 € if you want to try it out with a single recipient. You can then upgrade to a Group or Enterprise level subscription at any time.

Want to subscribe or have questions?
Call us at +47 412 69 669 or e-mail sales [at] macawresearch.com

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The personal conference

As the economy is trying to get back on its feet, the conference market faces rough times. Reductions in training and travel budgets mean fewer delegates, in the worst case canceled conferences. Though it need not be all doom and gloom. These developments could actually be a win-win situation for speakers and delegates.

Let’s face it. Not all conferences, and certainly not all speakers, are a great experience. For many delegates, it is a matter of wanting to hear one or two great speakers on subjects of high interest and the rest are of secondary interest. Some conferences also tend to be vendor dominated – if a large portion of the delegates and speakers are vendors, no one is particularly enthusiastic – neither vendors nor remaining delegates. This is not to say all conferences fall into this category, but we have all experienced those that do.

Sending delegates to conferences can also be quite expensive. There is usually a conference fee, transportation costs and hotel costs, not to mention work hours that could be spent on other tasks. Sending multiple delegates can thus be very costly for companies. For speakers, unless they are gurus that draw in lots of delegates, many only get the costs of transportation and stay covered, and if lucky a modest fee.

So, what if a company rather than sending a number of delegates to a conferenc, hired the speakers of highest interest to come to them and present their material? Call it personal conferencing. It is arguably not a new concept, but one that is very relevant in today’s business climate. The companies would only have to cover the transportation costs and potential costs of staying for the one or two speakers, rather than for all their delegates. The conference fees, partially or in full, could be paid to the speakers – and the company would gain a competitive advantage from having access to the speaker without everyone else in the industry hearing the same speech. The presentation could also be custom-tailored to the specific priorities of the organization, thus increasing its overall value.

It is evident there are win-win opportunities for speakers and delegates to get together in personal conferences – especially while the conference market remains rough.

At MACAW research we are happy to send speakers to both regular conferences AND personal conferences, whichever you prefer. If you want to hire one of our consultants as a speaker, please contact us via www.macawresearch.com

Testing Bing

MACAW research gave Wolfram Alpha a test drive earlier this year. This time we take a look at Bing, Microsoft’s latest search engine, which was launched worldwide in the beginning of June. Bing is promoted as a Decision Engine, which implies it is more than just a search engine.

To quote Microsoft, “Bing takes a new approach to helping customers use search to make better decisions, focusing initially on four key user tasks and related areas: making a purchase, planning a trip, researching a health condition or finding a local business.”

In addition to these specialized task-oriented features, Bing is also a general purpose search engine. As international business consultants, we do travel a bit, however we are more often performing searches as part of research projects. Thus we will limit our testing of Bing to general purpose searches where Google to this day reigns supreme.

If we’re going to be using Bing, it needs to perform as well as – or better – than Google. Our first test query “macaw research” run on both engines gave us slightly different results. Our website, www.macawresearch.com, is the top pick on both engines, and they both return the Wikipedia entry on Macaw, as well as the Tambopata Macaw Research project on the first search result page. Google returns links both to the MACAW Card Bulletin, published by us, and to our Twitter profile. Bing doesn’t bring back anything else related to our company on the first search result page, so it is a better option if your primary interest is bird research links. Our second query, “EU population”, also returns some shared results, including Wikipedia entries and links to optimumpopulation.org, but then there are some differences. Google returns what we would say is the most relevant for a market researcher – a link to Eurostat, the EU central statistics agency. After a bit more testing, in general, it seems like you get a different mix of results with Google and Bing, and the relevancy is fairly high for both engines, with a slightly higher utility in favor of Google for our test queries.

However, Bing has some nice features. For instance you can hover over a link and Bing will retrieve some basic information from the site the link leads to, allowing you a preview. Using this feature can be faster than clicking and then going back if the page doesn’t give you what you were looking for, according to Microsoft something that occurs in 24% of cases with clicks on search result links.

Bing also uses what Microsoft terms an Explore Panel, which contains Related Searches and Quick Tabs. The former is suggested other search strings related to your current search, whereas tabs are somewhat more sophisticated with dynamic categories that depend on the search. Searches for a certain city name yield Quick Tabs for tours, travel and images; searches for a car model generate categories on reviews, accessories and videos.

So, what’s the verdict? We’ll have to use Bing a bit more before we can conclude on anything, but it definitely looks promising. Search results tend to overlap with Google, but there are some differences, which suggest it can be worthwhile to do a search on both engines in some cases. With regards to features, Microsoft is on to something, particularly with preview, however it will probably not be long before Google or someone else copies it. All in all, we are pleasantly surprised.

Introduction to Market Intelligence

When people make decisions they rely on gathering and analyzing information. If you plan on buying a new stereo, you want to make sure you make a good purchase. You want to compare product features on different models, prices in different stores, available support and warranty, what other customers have experienced using the product, and a host of other information. In short, the more information you can base your decision on, the less likely that your purchase will be a bad one.

For small decisions people can get by with less information. The bigger the decision, the more informed you want to be. Big decisions typically involve a higher level of risk, and you want to minimize that risk. So you gather relevant data and analyze it to improve the odds of a successful decision. For businesses, whose decisions have much larger impact than individual consumers’, this is even more important. Companies need not only information, but information put together in a manner that makes sense in the context of their decisions. They need Market Intelligence.

Market Intelligence is a collective term for information about a company’s environment, which is gathered, structured, analyzed and presented to decision-makers. In this environment we find competitors and their products, customers and their experiences, strategies, websites, regulations, innovation, and a host of other factors that influence the market- and ultimately business decisions.

Companies need to be aware of their surroundings to reduce risks and improve their likelihood of success. They need to know when competitors launch new products or change their strategies, when and how government regulations will affect the industry, how customers and other groups experience interacting with the company, how the company’s new website compares to the old one and to competitors’ websites, and the list goes on.

Why do companies need to know these things? Because if they don’t they are running their businesses based on random decision-making. That doesn’t sound good at all, but the truth is that many decisions are made on gut-feeling or very limited information. This might come as a surprise in an era when information is more available than ever before.

In fact some managers would argue that they don’t use Market Intelligence because they are too busy (too busy to make good decisions?). Or they say they don’t know where to start looking, and they could waste days without finding what they are looking for. And even if they do find something, they don’t have the proper systems and the continuity required to optimize the value of the information. In short, their Market Intelligence efforts are performed ad hoc, require a lot of resources, and the results can vary.

At the same time, these managers all realize the value of good information. They need to be able to provide the necessary data and analysis to back their decisions. This is especially important when businesses are facing reduced sales revenue and they can’t afford to make mistakes. That is when the value of Market Intelligence is truly appreciated.

So, if Market Intelligence is a requirement for good decisions, and it’s difficult to get it right for companies on their own… then what should they do? Here’s an idea. Maybe someone else can do it for them. Specifically, maybe we at MACAW research can do it. We work with Market Intelligence all the time and we know how to get it right. Go ahead, check out our website and drop us a line. We won’t bite.

http://www.macawresearch.com