Payment data: A powerful strategy tool

Payments processors are the Google of the payments world, with a wealth of data that can be transformed at the flick of a switch into valuable business intelligence on real purchasing patterns. This gathered data can provide priceless input when it comes to business strategy, says Bhairav Trivedi, chief executive officer of Network International.

Small and large businesses reach targeted customers online using what is arguably the planet’s biggest data-crunching network: Google. The business model of Google is simple — track all activity on their free-to-use products like email, video, mobile, social and search, find the underlying patterns, and then give advertisers solutions that maximise their spend on online advertising.

Two drawbacks to this model are: one, it works best online, not so well off-line; and two, while the data includes some transactions, a massive proportion of the intelligence it creates is extrapolated from non-transactional activity.

Now imagine a network that does not have the same humongous amount of data, but what it has is one hundred per cent relevant to businesses. Payments processors have at their disposal real-world transaction-based data that has a higher degree of relevance, both online and off-line.

Why is this important? Let’s look at some examples.

Case Study 1: The SME

A start-up multi-cuisine restaurant that generates most of its revenue from deliveries is by its very nature a cash-only business. It is unbanked, and remains outside the financial system. It looks at point-of-sale (PoS) card-handling systems and tells us: “I’m too small to have these machines sitting around. I don’t have a nice shop front and 80 per cent of my work is deliveries.” But imagine the transformation if this restaurant adopts a mobile PoS machine that enables its customers to pay by card even at their doorsteps.

This delivers more than just freedom from cash. The information that we are able to gather from the use of PoS machines has proven to be extremely useful for SMEs and even for large companies.

We’re not talking about Big Data, with capital B and D, although that is also in our ambit. We’re talking about the business intelligence that PoS data can deliver, telling the restaurant how the profile of its consumers is changing. Have there been more takers for, say, Mexican food in the past three months? Are expatriates from the US the largest consumers or does the restaurant need to target Spanish-speaking clients? How does this intelligence impact social advertising or channel marketing?

Case Study 2: The corporation

Take a massive operation like Dubai Duty Free. We’re able to tell them that the average Russian, for instance, spends X amount of dollars at a duty free store. The merchant takes that intelligence, matches it to till-level information, and finds that a large percentage of Russians buy watches (hypothetically) at duty free. Or that Indians are purchasing gold at duty free or Chinese prefer cigars.

This gives each store the powerful ability to tweak and time POS marketing strategies, depending on which flights are landing at any given time.

While privacy laws prevent sharing of individual data; when aggregated into broad consumer profiles, the insights from consumer spending data can act as a powerful tool when added to the transaction data each merchant collects at the till.

Payments data tells us, for instance, that US-issued cards have been the largest source of receipts consistently from January 2014 to November 2015, in the latest available data. Saudi Arabia, which was the second largest spender until September 2015, according to our data, has been replaced by the UK in the last few months of the year.

At the processing level we know, for instance, that US credit cards are used the most for hotel spends, followed by jewellery and watches. Telecommunications, fashion and food are other big categories. It may be important for businesses to know that spend on UAE-issued cards is not only the largest but among the fastest growing. And this goes to supermarkets, government services and hotels, in that order.

That’s the equivalent of Big Data in the spending space. As the largest acquirer in the UAE and a major payment solutions provider in the Middle East and North Africa region, Network International has the power to crunch the spending data patterns of every company or business.

As a repository of payments data, that makes us the Google of the payments world, with authenticated intelligence on spending patterns. And, unlike Google, this data covers actual spends, not just potential spend based on search patterns. This makes the data many times more valuable to businesses.

This is how businesses, particularly SMEs, benefit from inclusion. Merchants big and small acquire the ability to act on intelligence that helps them craft their business strategy.

There is another advantage for merchants in becoming bankable and cashless. Consumers today can log into their credit card accounts and get a snapshot of their spending habits. For instance, if the consumer realises that her spend on automobile repair has increased significantly over the past three months, it’s time to get a new car. If SMEs have access to similar snapshots of their internal spending, it can add value to their cash-flow management.

With payments data, we can aggregate consumer profiles to say that, for example, a person driving a Brand X car and wearing Brand Y shirts is likely to spend a minimum of Dh500 on every weekend trip to the supermarket. If a person matching that profile walks into Supermarket Z, he may automatically be considered a valued consumer and offered incentives.

Supermarket Z may offer him Dh10 off his first transaction of more than Dh500. The next time he comes he gets Dh25 off, and the third time Dh50 off. Data shows that if someone shops three times at a particular place, they are hooked. Now Supermarket Z has Dh500 extra revenue each week that it didn’t have before.