card-linking and o2o industry survey 2019 › wp-content › uploads › 2019 › 10 ›...

Copyright 2019 All Rights Reserved [email protected] For more information visit www.cardlinx.org1

www.cardlinx.org

Card-Linkingand O2O Industry Survey 2019The CardLinx Associationwww.cardlinx.orgFrom Online-to-Offline


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


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


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


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

https://www.emarketer.com/content/us-digital-ad-spending-will-surpass-traditional-in-2019

https://www.emarketer.com/content/us-digital-ad-spending-will-surpass-traditional-in-2019


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.


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% .


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 .


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

http://www.cardlinx.org

card-linking and o2o industry survey 2019 › wp-content › uploads › 2019 › 10 ›...

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