Cashless payments: A rewarding business

The UAE is a connected and smart country. A payment card is essential for most of us. Whether it’s credit, debit or prepaid, or whether it’s on ApplePay or in our physical wallets, we pull our cards out several times a day to pay for cinema tickets, online shopping, groceries at the supermarket and even just for our morning coffees.

Electronic payments are convenient, safe and accepted everywhere. And, more than that, we are rewarded for using them. We get discounts at restaurants and money off at malls, airline miles or even cash back.

Like any loyalty programme, whether they are on debit or credit cards, card rewards are how banks thank you for being a customer. Think about your favourite coffee shop. If you buy enough coffees, they give you a free coffee or slice of cake in return. By incentivising you, they can build up your loyalty and encourage you back into store on a regular basis.

A card payment reward programme is similar. Banks and retailers want to encourage customers to use cashless payments because they offer a simple, safe and efficient way to pay.

An appealing reward card is a win-win situation: banks and retailers win a loyal customer who spends more, and who uses the most efficient way to pay. And consumers win with valuable benefits, together with a secure, convenient, reliable way to pay.

Every time you use your card, you collect points until you have enough to “spend” and often what you “spend” these points on is up to you. Like that free coffee or cake analogy, you can choose a payment card with benefits to suit you. One of the great things about card reward programmes is that there are so many options available — you really can find one to suit your lifestyle.

For banks, building customer loyalty by offering rewards for continued use of their cards is a clear benefit of reward card programmes. More broadly, increasing card payments (whether via physical or digital cards) brings other benefits.

Cashless payments are a more efficient and cost-effective form of payment than traditional methods like cash, so it’s in the bank’s interest to encourage increased card payments as compared to cash withdrawal. They also help them to better understand their customers — which in turn helps them to constantly improve the available benefits.

For retailers, there’s a whole range of advantages. Cashless payments are more efficient for them as they help bring down reconciliation and cash handling costs. Accepting cash costs businesses about 7 cents in every dollar received versus 5 cents from digital sources, according to Visa’s recent study, Cashless Cities.

More importantly, cashless payments can offer customers a significantly enhanced payment experience. Seventy-four per cent of consumers surveyed by Visa assume a quicker payment experience when a Visa logo is displayed. Why? Because it represents a simple, safe and seamless payment. That means shorter checkout lines in-store and fewer uncompleted transactions online, which means happier customers and more sales for retailers. They also benefit from customer loyalty and repeat business, with 70 per cent of consumers saying that they make repeat purchases from a store showing the Visa logo.

Payment companies want to encourage the growth of cashless payments. Reward card programme are a great way to support that growth because they encourage customers to choose payment by card over other methods. Reward card programmes serve as another education tool for the payment companies. Because once consumers have experienced the benefits of using cashless payments, they are much more likely to become repeat users.

There are even benefits to governments from increased card payments, including a reduction in crime, increased tax revenues and an overall economic boost. Visa’s Cashless Cities study found that greater usage of digital payments could support an average of over 45,000 additional jobs across the 100 cities it looked at by 2032.

Ultimately, it becomes a virtuous circle: once customers have experienced the benefits of paying by card, they typically become repeat users, not just building up their own reward points but also magnifying the wider benefits. It turns out everyone reaps the rewards from the humble rewards card.

— Marcello Baricordi is general manager for the Middle East and North Africa (Mena) at Visa International.