A recent Mintel Report on the payments industry confirmed that, when it comes to bills, consumers continue to prefer checks over other payment methods, including credit cards. This is puzzling when you consider how popular credit cards are for other types of purchases and given the additional security, options to extend credit and potential rewards available. At the same time, younger consumers, who also use checks to pay bills, seem more inclined to shift their bill payments to debit cards rather than credit cards suggesting that credit cards may miss out completely in the long term.
Given the potential opportunity, it is surprising that only a few credit card issuers have been putting bills, such as utilities and other recurring payments, at the center of their acquisition marketing efforts. Barclaycard, with its Rewards MasterCard, promotes an accelerated earn-rate (2x points) on rewards for utilities and the TD Easy Rewards Visa also earns accelerated rewards (5x points) for cable, phone and utility payments for 6 months. Some cash back cards, notably the new Citi Double Cash Card and the BankAmericard Cash Rewards Visa go out of their way to explain how recurring payments like phone bills and insurance are eligible for cash back rewards, but these offers are in the minority and, for the most part, recurring payments aren’t mentioned.
There is an opportunity to design card products and marketing campaigns, for both new and existing customers, with recurring payments in mind so as not to miss out on this sizeable chunk of the US payments industry. Here are 5 benefits that could be built around the core value proposition of a rewards card that organizes all recurring payments in one place.
1. Tiered rewards program – earn more points for adding more recurring payments e.g., 20% bonus if you add 5 recurring payments.
2. Easy to manage – see all recurring payments in one place.
3. Card expiry alerts – automatically sends new account numbers to merchants when cards expire.
4. Security alerts – sends an alert when a recurring annual payment is up for renewal or when a recurring payment amount changes.
5. Contextual rewards – sends coupons, discounts and recommendations based on recurring payment merchants.
Card marketers should consider how customers and prospects are paying their billsCard marketers should consider how customers and prospects are paying their bills and design marketing messages that will influence behavior and grow market share.
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Andrew Davidson is the Senior Vice President of Mintel Comperemedia. Andrew uses his 20 years of financial services research experience to provide insights to clients around key trends and industry marketing activity, helping companies understand and react to an ever-changing competitive environment.
