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How Will Consumers Pay in the Future? Any Way They Want

New innovations around using rewards points at the point of sale are giving consumers what they want: more freedom in how they pay.

It seems as if loyalty and rewards programs haven’t changed a great deal in a long time. Think of how long consumers have been complaining about blackout dates in airline programs. But a couple of companies are working to change the way consumers use and think about loyalty rewards and points. Both MasterCard and WingCash are enabling consumers to use their points and rewards to make in-store purchases, giving loyalty programs an opportunity to offer greater flexibility to customers.

MasterCard is rolling out a new redemption program called Pay with Rewards that enables cardholders to pay for their in-store card purchases with their rewards points. Cardholders just have to pre-select the Pay with Rewards option in the MasterCard mobile app, and their next card purchase is paid with points. The program has already been piloted in six different countries, and MasterCard is beginning to integrate the technology with its issuers, Chris Guiney, vice president of product development at MasterCard Loyalty, said during Finovate in New York yesterday.

“Right now the flexibility is the demand. Consumers want the flexibility to use their points at the point of interaction… This will allow issuers to differentiate their [loyalty programs],” Kyle Clark, Guiney’s fellow VP of product development at MasterCard Loyalty, remarked.

[For more of our payments coverage, check out: 5 Things Apple Got Right With ApplePay.]

Meanwhile WingCash, which provides a cash-based electronic wallet for consumers, merchants, and financial institutions, is introducing a capability called Brand Cash for merchants to offer their own branded cash rewards in the WingCash wallet. When a customer swipes his card at a payments terminal, the terminal pulls up a screen offering him the chance to pay with his rewards cash with that merchant.

“We can tell merchants this platform offers everything with a single swipe, and it gives any business the chance to offer rewards to their customers,” Bradley Wilkes, WingCash’s CEO said.

“If a consumer adds a gift card to a mobile app, that doesn’t solve for how that [mobile app] will be accepted at the merchant. Plastic is ubiquitous, and when you use your credit card, you should be able to tap into all of your gifts and rewards,” Vilash Poovala, co-founder and CTO of PayClip, which is partnering with WingCash to bring the solution to Mexico, added.

Although both MasterCard’s and WingCash’s programs are card-based, they can also both be used with EMV chip or mobile payments apps. They both offer flexibility for consumers and offer ubiquity because they are form-factor agnostic. By being form-factor agnostic both of these solutions are on the right track in answering consumers’ demands from payments providers. From a consumers’ perspective, it isn’t about what form factor the payment is made with (plastic vs. mobile device). It’s about giving the most options in how to pay -- with points, a credit card, a checking account, maybe even Bitcoins, which PayPal announced yesterday it is integrating into its payments hub -- and letting the customers choose which form factor they’d prefer. Giving customers more choices to pay according to their preferences will be more important to winning over customers than providing the coolest new way to pay.

[Join the Women in Technology Panel & Luncheon at Interop on Wednesday, October 1. How different are IT career paths and opportunities for men and women in 2014? Join your peers for an open forum discussing how to advance in an IT organization, keep your skills sharp, and build a mentoring network,]

Jonathan Camhi has been an associate editor with Bank Systems & Technology since 2012. He previously worked as a freelance journalist in New York City covering politics, health and immigration, and has a master's degree from the City University of New York's Graduate School ... View Full Bio

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Becca L
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Becca L,
User Rank: Author
9/25/2014 | 3:53:11 PM
Re: If only AA would play
I had no idea is was such a common opinion. If this were 2009 I'd probably start a Facebook group for it.
Jonathan_Camhi
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Jonathan_Camhi,
User Rank: Author
9/25/2014 | 3:45:50 PM
Re: If only AA would play
Wow AA is really taking a beating on the message boards here. Sounds like there should be some kind of support group for AA customers.
Becca L
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Becca L,
User Rank: Author
9/24/2014 | 6:48:13 PM
Re: If only AA would play
Ugh, I hear you, I ended up using my thousands of AA points on a couple magazine subscription days before they expired. They never arrived.
Greg MacSweeney
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Greg MacSweeney,
User Rank: Author
9/24/2014 | 4:00:22 PM
Re: If only AA would play
Certainly. Bitcoin certainly has the media's attention, but I'm not sure what role they will play in the payments game, ultimately. There are many things that need to fall into place first, so I'm sure we will be debating this for some time to come!
Jonathan_Camhi
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Jonathan_Camhi,
User Rank: Author
9/24/2014 | 3:54:50 PM
Re: If only AA would play
PayPal seems to believe in the potential of paying with Bitcoins, if you check out the announcement from yesterday. Not sure if they're right. But I think that even if Bitcoin doesn't make it as a payments tool, some other virtual currency will come along and succeed.
Greg MacSweeney
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Greg MacSweeney,
User Rank: Author
9/24/2014 | 3:51:20 PM
Re: If only AA would play
Bitcoins...yeah. It's probably just has hard to spend bitcoins as AA miles.
KBurger
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KBurger,
User Rank: Author
9/24/2014 | 3:47:38 PM
Re: If only AA would play
Here's the key: "From a consumers' perspective, it isn't about what form factor the payment is made with (plastic vs. mobile device). It's about giving the most options in how to pay." It's all about convenience and ease of use. At this point, I don't see anyone participating in any kind of rewards program where it is impossible or cumbersome to redeem the points.
Jonathan_Camhi
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Jonathan_Camhi,
User Rank: Author
9/24/2014 | 3:46:40 PM
Re: If only AA would play
If only you could exchange them for Bitcoins Greg.
Byurcan
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Byurcan,
User Rank: Author
9/24/2014 | 10:11:42 AM
Re: If only AA would play
Yeah, definitely seems like a good product from both Wingcash and Mastercard. This is what Finovate is all about!
Greg MacSweeney
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Greg MacSweeney,
User Rank: Author
9/24/2014 | 9:58:40 AM
If only AA would play
Wow, at one time i had over 300k in American Airline miles sitting in my account. Every time i tried to use them, it was a blackout date. If I could have used them to buy coffee, or gasoline, or something that I use everyday, I might still fly AA.
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