I recently had a chat with Rob Hanlon, CEO at CyberMoney about the changes we’ve seen in the past several decades with consumers, merchants and third-party service providers. Hanlon noted we’ve come a long way from the big brand era.
Back in the day, it was common for people to think the big brands didn’t care about them. This paved the way for store brands with messaging about “better for you” ingredients that provide health benefits, that rapidly became a multibillion dollar industry. “It’s crazy how huge it became in a relatively short amount of time,” he said. “I saw it in the consumer packaged goods industry and I see the same landscape in payments.”
Hanlon went on to say that credit cards have been around for decades and work really well, adding, I love my loyalty and cashback rewards – I grew up in that. But the rising generation doesn’t care as much about loyalty. They want brands that care about them and they want to know where their money’s going and why should I give money to you? What is your purpose, your vision?
Leveraging credit card rails
Traditional credit card programs that initially attracted me are losing a little bit of their luster, Hanlon stated, adding that it’s not a massive change because credit cards are still dominant, but there are changes coming. While I can’t say how fast it will happen or who the winners will be, I know that loyalties are changing, purpose is changing, and everyone’s trying to figure that out in payments, about what to do about the credit card rails.
We’ve all seen examples of tech startups that have rapidly scaled, unencumbered by legacy infrastructure, Hanlon noted, and it’s similar in the food industry. Mom and Pop players with one line that compete with massive manufacturers with 100 lines can get goods to a retailer more efficiently because they’re making one thing, he said. “Economies of scale of food are not what they seem and it’s similar to payments: tech startups that can pivot on a dime and cut their costs.”
Serving consumers by serving merchants
The merchant is all too frequently at the bottom of the priority list, Hanlon stated. CyberMoney is a merchant-first company that creates connections between merchants and consumers. If you want to play in the space and take share from card brands and traditional payment rails, of course you need to be cheaper. But low cost is just a qualifier, not a differentiator.
“Low cost doesn’t really scale; there needs to be another storyline, what I call the Velcro effect,” Hanlon said. “If you see Velcro up close, it’s a series of loops, millions of them on a strip, with every single hook and loop creating a bond. The same thing is true if you want to win in this space, you need multiple hooks and loops, between consumers and merchants.”
Low cost is not enough to attract a consumer, Hanlon added; you need to find other ways, which is the idea behind our tagline: “serving consumers by serving merchants.” We’re merchant first, but we’re there to help the merchant connect with the consumer. If you go back to the idea, which I shared in my MPC21 presentation; consumers have different ideas now. They want to know where their money is going and what the merchant stands for and merchants need to share their stories and create compelling connections with consumers; there’s a role for payments in this.
Another thing about CyberMoney, Hanlon noted, is that it is actually much like private label. It’s not about our brand or flavor. You don’t know who made it. There’s no brand name on CyberMoney unless the merchant wants their name on it.
CyberMoney’s margin structure is different than a typical payment card rail and there are revenue-sharing benefits for resellers and channel partners, Hanlon noted, explaining that the company’s low-cost model allows revenue sharing for ISOs, distributors and merchants. And merchants get control of refunds and fraud because we guarantee the payment, he added. Each payment is underwritten, so they don’t have to worry about fraudulent payments either.
Best of all, merchants controls the flash window at the point of interaction, Hanlon said. This real estate is not available on a traditional credit card sale and we think it’s a powerful way for merchants to create that connection with consumers and get the consumer to care about them and have an affinity with them. Sometimes you have to manufacture that connection, with that real estate screen and other times, that natural affinity is already there and you can just take advantage of it or be part of it.
Okay, I finally get the store brand concept, I said. You’re adding the merchant’s store brand to the lineup, alongside Visa MasterCard, American Express. Why not have your store brand next to those, with “good-for-you” ingredients in the form of lower cost and higher value.
“Absolutely, and every time you use that payment method, I’ll donate X amount to your school or charity, whatever the cause is,” Hanlon said. “Price is just a qualifier but purpose really matters.”
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Dale S. Laszig
Dale S. Laszig, vice president, content marketing at Mobile Marketing & Technology and managing director, DSL Direct, is a payments industry journalist and content strategist who writes for multiple trade journals. Follow her on LinkedIn at https://www.linkedin.com/in/dalelaszig/ and @DSLdirect on Twitter.