Card-Linking at Year 5: Momentum in Some Areas, Questions in Others

Five years in, is card-linking finally assuming a place in the promotional media pantheon alongside reviews, coupons, prepaid deals and loyalty incentives?

With card-linking, consumers link their credit and debit cards to retailers and brands. The resulting transaction data can be mined to help retailers, brands and other commerce companies provide targeted offers and incentives to drive new purchases, or “incremental spend.”

At the same time, card-linking can make promotions more efficient, profitable and even fun, while allowing retailers to cut back on advertising. Banks, credit card companies, payment networks,point of sales (POS) device providers and loyalty networks are the key card-linking facilitators.

After an initial splash and hundreds of millions of dollars spent, however, card-linking isn’t an especially hot topic in the industry. Card-linking is rarely on the agenda at major meetings of constituent parties, like Money 2020 (Payment networks, credit cards and Point of Sales) and Shoptalk (retail services).

Summing up a ShopTalk meeting in mid-2016, I observed that card linking and related loyalty programs “seemed to have gotten lost in the shuffle of digital solutions (i.e. omni-channel, email, artificial intelligence, email).” There has been even less activity on the SMB front, which only sees card-linking via third party loyalty programs such as Empyr and First Data’s Clover Rewards (formerly Perka).

And yet….behind the scenes, there’s a lot of growing going on under the hood. Mobile-first retailers and brands in Asia, in particular, seem to have begun to embrace card-linking. In Europe, card-linking may have just received a major boost with the imposition of the EU’s consumer opt-in GPDR data rules.

Cardlinx, a group that promotes the development of card-linking, boldly asserts that the “opt in” requirements of the rules can help card-linking replace the involuntary “Freemium” ad models of Facebook and Google. I also note Wall Street’s confidence in Cardlytics, one of the segment’s biggest players. Its stock has gone from $13 at its IPO this February to $22.14 today.

Against this backdrop, Cardlinx has released its annual survey of its card linking players. I partnered with the association on the first survey of its members four years ago, so I am watching its findings with special interest.

The new survey reflects a lot of bullishness towards card-linking’s development. Sixty-two percent of respondents experienced at least a doubling in their card-linked offer (CLO) transactions over the past year. High frequency businesses will be the greatest adopters of card-linking. According to the survey, restaurants now make up 30 percent of customers; grocery stores make up 19 percent, and department stores make up 17 percent. Increasingly, travel has also become a major segment. Travel now makes up 11 percent of all card linked transactions.

Respondents – which include such key international players as Microsoft, Rakuten, Samsung Card, Bank of America, Sumitomo Mitsui Card, Mitsubishi UFJ Nicos, Hilton, AEON, MasterCard and JCB — indicate even greater confidence as the industry gets a boost from technology adoption.

The adoption of mobile wallets seems especially paramount here. After several false starts, mobile wallets are breaking through in China via Alipay and WeChat Pay. Their impact will likely spread around the world, suggests the association.

The association also suggests that card-linking will be further driven by such “AI commerce” features as personalized ads and offer targeting, card origination, online-to-offline conversion tracking, fraud detection and new customer services like biometric checkouts and cashier-less registers. Block chain technology, which tracks every aspect of a transaction, could also play a major role, either in partnership with card-linking, or in competition.