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Copyright 2019 All Rights Reserved info@cardlinx.org For more information visit www.cardlinx.org1
www.cardlinx.org
Card-Linkingand O2O Industry Survey 2019The CardLinx Associationwww.cardlinx.orgFrom Online-to-Offline
Copyright 2019 All Rights Reserved info@cardlinx.org For more information visit www.cardlinx.org2
Table of ContentsEXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
CLO Programs Proliferate Across The Globe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3New Technologies Signal Prosperity Ahead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Growth Meets Scale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
KEY FINDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1 . Card-linking Becomes 2nd Most Popular Advertising Channel After Social Media Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.BestNewTech–Card-linkedOffersinMobileWallets . . . . . . . . . . . . . . . . . . 43.CrossBorderOffers–ABigMissedOpportunity . . . . . . . . . . . . . . . . . . . . . . . . 44 . Restaurants – The Best Merchant Industry for CLO . . . . . . . . . . . . . . . . . . . . . 45 . Card-linking Growth Hits Mature Scale in USA . . . . . . . . . . . . . . . . . . . . . . . . . . 4
DETAILED SURVEY FINDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1 . Card-linking Becomes 2nd Most Popular Advertising Channel After Social Media Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2 . Card-linking Growth Hits Mature Scale in USA . . . . . . . . . . . . . . . . . . . . . . . . . . 53.BestNewTech–Card-linkedOffersinMobileWallets . . . . . . . . . . . . . . . . . . 64.CrossBorderOffers–ABigMissedOpportunity . . . . . . . . . . . . . . . . . . . . . . . . 65 . Restaurants – The Best Merchant Industry for CLO . . . . . . . . . . . . . . . . . . . . . 76 . Customer Loyalty – Growing CLO for Merchants . . . . . . . . . . . . . . . . . . . . . . . . 77 . New Merchants Adopt CLO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 . Fair Share – CLO Earns Merchants Advertising Budget Slot . . . . . . . . . . . . . . . 89 . CLO Drives Billions In Spend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Copyright 2019 All Rights Reserved info@cardlinx.org For more information visit www.cardlinx.org3
The CardLinx Association is the premier global trade association for digital commerce and card-linking . Card-linking refers to the technology enabling the linking of a consumer’s online mobile apptoapaymentcardormobilewalletusedforoffline/in-storepurchases.Everyyear,TheCardLinxAssociationsurveysitsmembersinthelargest,fastestgrowingcard-linkingmarketsincludingtheUS,China,Japan,Germany,France,UnitedKingdomandSouthKoreaamongothers.CardLinx member companies include the largest and most innovate companies in the industry includingMicrosoft,Samsung,Rakuten,Mastercard,Discover,UBS,FIS,AEON,Hilton,HarveyNicholsamong others.
Our survey highlights key new developments from the rapidly developing global market .
CLO Programs Proliferate Across The GlobeOutsideoftheUS,card-linkingcontinuesonrapidgrowthpace.NewCLOpublishersandappsincludeChina(55Haitao),Japan(RakutenCard),TheUnitedKingdom(Barclays),France(LCLandBanquesPostale),Switzerland(Postfinanz)launchingwithneworimprovedprograms.
New Technologies Signal Prosperity Ahead Promising new technologies signal future prosperity for the CLO industry . 41% of survey respondents indicatedthatcard-linkedoffersinmobilewalletslikeApplePayandSamsungPayarethemostpromisingtechnologyinthesector.Thesepractical,“neartermlaunch”technologiesbeatoutmorefuturistictechnologieslikecashierlessstoresorbiometricpaymentswithoffers.
Merchantsarealsoexperimentingwithnewofferconstructsandnotjustrelyingoncard-linkingfornewcustomeracquisition.27%ofsurveyrespondentsindicatedloyaltypointsofferswerethefavorite customer reward versus only 10% last year .
Growth Meets ScaleThisyearonly44%ofsurveyrespondentssawCLOtransactiongrowthfasterthan100%.In2018,62% of respondents saw transaction growth higher than 100% . 2019 marked the year that card-linking’srapidgrowthencounteredthelawoflargenumbers.IntheUSA,themajorityoftop10card-issuershavenowadoptedcard-linking.ThesescaleissuersincludeBankofAmerica,Chase,WellsFargoandAmericanExpress.Astheselargebankshaveimplementedprograms,andasCLOprogramsnowreachhundredsofmillionsofconsumersintheUSA,thehistoricaltripledigitgrowthrate for card-linking has become more challenging to achieve .
Executive Summary
Copyright 2019 All Rights Reserved info@cardlinx.org For more information visit www.cardlinx.org4
Our top five finding summarize the most important new developments in the card-linking industry.
1. Card-linking Becomes 2nd Most Popular Advertising Channel After Social Media MarketingSocial media marketing is the most commonly used marketing channel with 20% of respondentsselectingitastheirpreferredchannel.However,Card-linkedMarketingmovedup to the second most preferred channel (at 15 .9%) . It tied for second place with Search EngineMarketing(SEOmarketing).Card-linkingbeatTVAdvertising(10.1%)andAffiliateMarketing at 12 .1% .
2. Best New Tech – Card-linked Offers in Mobile Wallets Survey respondents overwhelmingly chose CLO in mobile wallets as the best new technology . 41 .2% of respondents selected this as the best new tech . Other new technologies score much lowerincluding;Cashier-lessStores(23.5%),BiometricPayments(10.3%),ArtificialIntelligenceinInternet-ConnectedDevices(8.8%),DigitalShoppingAssistants(4.4%).Consumersandmerchants won’t wait long for new CLO in mobile wallets . New programs using this technology include the new Apple Card\Apple Pay partnering with Uber for cash back .
3. Cross Border Offers – A Big Missed OpportunityForbanksandcardissuers,themostprofitableinterchangecategoryiscrossbordercardpayments.Forconsumers,thedatasuggeststhattheyaremuchmorelikelytoredeemcard-linkedofferswhentravellingawayfromhome.Yetonly30%ofsurveyparticipantsinthisyear’ssurveyhaveacross-bordercard-linkedofferprogram.Thesurveyrevealsthatthelackofcrossborderoffersmaybethebiggestmissedopportunityforcard-linkedindustryparticipants.
4. Restaurants – The Best Merchant Industry for CLOAmongthedifferentmerchanttypesthatusecard-linking,restaurantsremainthemostpopular.21% of survey respondents indicate that restaurants are the top merchant category for CLO . ExamplesofsuccessfulprogramsincludeGroupons,Groupon+andJapan’s,JapanFoodie.
5. Card-linking Growth Hits Mature Scale in USAIn2018,themajorityofrespondents(62%)hadtheircard-linkedtransactionsgrowmorethan100%.In2019,44.4%oftherespondentsreportedthegrowthmorethan100%.ThisdatashowsthattheindustryhasbecomemainstreamintheUSAforthefirsttimesinceoursurveyinception . As numerous large banks have already implemented card linking hitting triple digit growthhasbecomemoredifficulttoachieve.
Key Findings
Copyright 2019 All Rights Reserved info@cardlinx.org For more information visit www.cardlinx.org5
1. Card-linking Becomes 2nd Most Popular Advertising Channel After Social Media Marketing
0%
5%
10%
15%
20%
25%
Card-linked offers
Card-linked loyalty
TV advertising
Social media marketing
Search Engine
Mobile wallet loyalty
Affiliate marketing/online-to-online
Affiliate marketing/online-to-offline
15.9%
9.7% 10.1%
19.8%
15.9%
8.7%
12.1%
7.7%
What digital marketing tools did your company use in the last 12 months
Social media marketing is the most commonly used marketing channel with 20% of respondents selectingitastheirpreferredchannel.However,Card-linkingMarketingmoveduptothesecondmostpreferredchannel(at15.9%),tiedforsecondplacewithSearchEngineMarketing(SEO marketing).Card-linkingbeatTVAdvertising(10.1%)andAffiliateMarketingat12.1%.
Traditionalmedialikeprint,radioandtelevision,whichdominatedthemarketfordecades,hasgraduallybeenreplacedbydigitaladvertising.AccordingtoeMarketer,2019isthefirstyearwhendigitaladspendestimates($129billion)arelargerthantraditionaladspendprojections($109 billion) https://www.emarketer.com/content/us-digital-ad-spending-will-surpass-traditional-in-2019 . Card-linking is gaining its fair share as digital advertising channel .
2. Card-linking Growth Hits Mature Scale in USA
0%
10%
20%
30%
40%
50%
60%
70%
0% to 10%10% to 30%30% to 50%50% to 100%More than 100%
2019 2018
Growth rate of card-linking program
In2018,themajorityofrespondents(62%)hadtheircard-linkedtransactionsgrowmorethan100%.In2019,44.4%oftherespondentsreportedthegrowthmorethan100%.ThisdatashowsthattheindustryhasbecomemainstreamintheUSAforthefirsttimesinceoursurveyinception.
Detailed Survey Findings
Copyright 2019 All Rights Reserved info@cardlinx.org For more information visit www.cardlinx.org6
3. Best New Tech – Card-linked Offers in Mobile Wallets
16%
7%
28%
4%
6%
4% 3%
Cashier-less Stores
Biometric Payments
Card-linking programs embedded in mobile wallets
Peer-to-Peer Payments
Artificial Intelligence in internet-connected devices
In-car commerce
Digital Assistants
What is the most promising technology for online-to-offline commerce?
Survey respondents overwhelmingly chose CLO in mobile wallets as the best new technology . 41 .2% of respondents selected this as the best new tech . Other new technologies score much lowerincluding;Cashier-lessStores(23.5%),BiometricPayments(10.3%),ArtificialIntelligenceinInternet-ConnectedDevices(8.8%),DigitalShoppingAssistants(4.4%).Consumersandmerchantswon’twaitlongfornewCLOinmobilewalletoffers.Newprogramsusingthistechnology include the new Apple Card\Apple Pay partnering with Uber for cash back .
4. Cross Border Offers – A Big Missed Opportunity
YES30.2%
NO69.8%
Does your company use or provide cross border offers?
Forbanksandcardissuers,themostprofitableinterchangecategoryiscrossbordercardpayments.Forconsumers,thedatasuggeststhattheyaremuchmorelikelytoredeemcard-linkedofferswhentravellingawayfromhome.Yetonly30%ofsurveyparticipantsinthisyear’ssurveyhaveacross-bordercard-linkedofferprogram.Thesurveyrevealsthatthelackofcrossborderoffersmaybethebiggestmissedopportunityforcard-linkedindustry participants.
Copyright 2019 All Rights Reserved info@cardlinx.org For more information visit www.cardlinx.org7
5. Restaurants – The Best Merchant Industry for CLOAmongthedifferentmerchanttypesthatusecard-linking,restaurantsremainthemostpopular.21% of survey respondents indicate restaurants as the top merchant category for CLO . Examples ofsuccessfulprogramsincludeGroupons,Groupon+andJapan’sJapanFoodie.
0% 5% 10% 15% 20% 25%
Other
Travel Services (Hotel, Airline, Car Rental)
Specialty Retail
Grocery
Clothing / Apparel
Restaurants
Department stores
Shopping centers 10.4
15.9
20.7
15.9
11.6
14
9.1
2.4
Which Merchant Category is the best fit for card-linking?
6. Customer Loyalty – Growing CLO for Merchants
0%
10%
20%
30%
40%
50%
60%
70%
OtherBuy one, get one free
Loyalty program benefitsor bonus points
“Fixed doller off”cash back discount
“% off” cashback discount
2019 2018
What reward type do consumers prefer?
Merchantsareexperimentingwithnewofferconstructsandnotjustrelyingoncard-linkingfornewcustomeracquisition.27%ofsurveyrespondentsindicatedloyaltypointsofferswerethefavorite customer reward versus only 10% last year .
7. New Merchants Adopt CLO
More than 100%
50% to 100%
30% to 50%
10% to 30%
0% to 10%
12.5%12.5%
12.5%
21.9%40.6%
What is the growth rate of merchants adopting card-linking?
New merchants are adopting card-linking all over the world . About one-fourth (25%) of survey respondents reported the growth rate of new merchants to be more than 50% . Nearly half of survey respondents (47%) reported the growth rate of new merchants at more than 30% .
Copyright 2019 All Rights Reserved info@cardlinx.org For more information visit www.cardlinx.org88
8. Fair Share – CLO Earns Merchants Advertising Budget SlotIn2019,26.7%ofsurveyrespondentsshowedtheyspent10%to30%oftheiradvertisingbudget for card-linking . 2 .2% spent more than 50% of their advertising budget on CLO . Card-linking is emerging as mainstream advertising channel along with social media marketing and socialengineoptimization.
26.7%
31.1%
2.2%2.2%
37.8%
80% to 100%
50% to 80%
30% to 50%
10% to 30%
5% to 10%
0% to 5%
What percentage of merchant advertising budget is going towards card-linking?
9. CLO Drives Billions In SpendWhensurveyrespondentswereasked“Whatisthetotalretailsalestiedtocard-linkedtransactionsinyourcountryinthelast12months?”
19%
12%
6%63%
Over $50 billion
$30–$50 billion
$10–$30 billion
$1–$10 billion
What is the total retail sales tied to card-linked transactions in your country in the last 12 months?
■ 62 .5% of survey respondents reported $1 to $10 billion retail sales tied to card-linked transactions .
■ 18 .8% report over $50 billion tied to card-linked transactions .
Copyright 2019 All Rights Reserved info@cardlinx.org For more information visit www.cardlinx.org9
Appendix
ABOUT THE CARDLINX ASSOCIATIONTheCardLinxAssociationisthepremier,multi-industrytradeassociationfocusedonpromotingonline-to-offlinecommerceandcard-linkingworldwide.Onbehalfofitsmembers,theassociationfosterscross-industrycollaboration,developsindustryservices,organizesexecutive-levelinnovationforumsandinstitutescommonstandardstominimizeandeliminate friction for purchases . Founding members of the CardLinx Association include Microsoft,Mastercard,BankofAmerica,TransUnionandFirstData;othercurrentmembersinclude:Hilton,FIS,MUFG,UBS,SumitomoMitsuiCardCompanyandRakuten.MembershipinCardLinxAssociationisopentofinancialinstitutions,publishers,advertisers,merchants,merchantacquirers,paymentnetworksandfintechcompanies.Companiesinterestedinjoiningtheassociationshouldvisit:www.cardlinx.org
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