In the past, lenders have seen a considerable amount of value in convincing consumers to take on credit card debt and carry it from one month to the next. But now, as borrowers shift their habits, lenders are looking for new ways to find value in those accounts.
One way in which one of the nation’s top lenders is doing this is by taking advantage of the data that each transaction it processes provides, according to a report from American Banker‘s Bank Technology News. American Express recently opened an office in Manhattan in an effort to grow its digital wallet platform known as Serve for its 200 devoted employees.
One thing that group quickly discovered is that even if consumers aren’t carrying large amounts of debt from one month to the next like they did before the recent recession, the use of their cards can still be valuable.
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Here’s how. If users give their permission by opting in to share their data, Serve could allow the company to keep tabs on consumers’ purchases beginning with when they initially received an advertisement about a sale right up through the point at which the transaction is processed, the report said. That kind of knowledge would make advertising worth a lot more than it currently is, and would help companies to better tailor their marketing efforts to specific consumers.
“We are beginning to realise that data is actually more valuable than the payment transaction itself,” Dan Schulman, Amex’s group president of enterprise growth, told the site. “The reason that Google wants to move in with Google Wallet is not because they want to move into payments … What they really want is the data from that transaction.”
For instance, advertisers pay Google 80 or 85 cents per click on one of its targeted ads, the report said. But the reason the price is so low is that there’s not usually a way for the company to see the result of that marketing, because 70% of those clicks result in offline sales. If the company was able to better track this type of data, the per-click value would likely approach $8. Serve, therefore, is being developed to do exactly that.
(American Express denies that Serve was created for this reason. “Serve was created to enable digital commerce allowing consumers a better way to spend, send and receive money,” a spokesperson told us.)
Mobile wallets will be able to tell companies a lot more about consumers’ shopping habits than their current cards will, because many of these programs will be linked to coupons, advertising, and other promotions.