Comperemedia’s Chief Insights Officer, Andrew Davidson is well known for sharing the latest insights on financial services products and marketing strategies/innovations on his LinkedIn, as an event speaker and as a host on Mintel’s Little Conversation podcast. In this bi-weekly recap, he will provide you with the latest news and insights happening in the financial services industry.
Here are the 5 things you need to know:
1. U.S. Bank encourages customers to pay with their palms
Top of PALM! U.S. Bank is the ONLY bank that has been encouraging customers to add their credit cards to their Amazon One profile. The aim: to be the default card (top of wallet) when customers pay with their palms at Amazon Go stores, Whole Foods, and participating 3rd party locations.
Amazon One is a contactless service that lets users identify themselves, enter buildings, and pay using their palms.
Key milestones:
- Amazon One was launched in 2020.
- In 2023, Amazon One was added to ALL 500 Whole Foods grocery stores.
- Also in 2023, Amazon One Enterprise was launched providing palm scanning authentication at offices.
- In 2024, Amazon One rolled out a new app so that new users can sign up by scanning their palm in the app rather than at a physical location.
A window of opportunity:
- Finding the right moment. Even though Amazon customers can sign in to Amazon One with their Amazon credentials, it is a separate platform from Amazon and it sounds like the payment portion isn’t a completely seamless import. Amazon One requires you to have your “Amazon account, your mobile number, and a credit or debit card” to sign up and to “be sure to bring a credit/debit card as you may need to insert it or enter your phone number for verification purposes.” U.S. Bank has cleverly identified these moments as a window of opportunity to make its card the default card for customers looking to sign up for Amazon One.
- Tweaking the message. U.S. Bank first began communicating about Amazon One to customers via email in January and then again in June and the message has evolved to reflect the evolution of Amazon One. In January, it was positioned as a “secure fast and free way to pay (client link only).” In June it was positioned as a “secure fast and free identity service (client link only).” U.S. Bank’s email copy reveals how Amazon One is sharpening its message as the use cases for this technology expand beyond payments.
2. Wells Fargo and Expedia Group launch two new credit cards
Watch out for OTA co-brand cards! Last week, Wells Fargo and Expedia Group launched two new credit cards.
The video from Proud Money breaks down the value prop but here are the basics:
- One Key Card vs One Key + Card
- No annual fee vs $99 annual fee
- $400 bonus vs $600 bonus
- Silver tier vs Gold tier (higher earn potential)
- Both earn 3% on Expedia, Hotels.co, Vrbo and gas/grocery/dining purchases
- 1.5% vs 2% on other purchases
- One Key + Card also has a $ 100-anniversary bonus (OneKeyCash)
Why it’s significant?
- Rising Online Travel Agency (OTA) usage. Despite direct bookings still being more popular, OTA usage has been rising. The percentage of travelers using OTAs increased from 38% in 2022 to 43% in 2024 according to Mintel. This growth is attributed to aggressive marketing strategies and the launch/expansion of loyalty programs like One Key. Both Expedia Group and Booking Holdings spent close to $7 BILLION on marketing in 2023, up significantly from just a couple of years ago. The momentum is building.
- Card category evolution. One of the key drivers is the development of loyalty programs that bring these travel brands together under one umbrella that can be reflected in a credit card. Wells Fargo previously had the hotels.com credit card and Citi had Expedia and now they both fall under One Key issued by Wells. Booking Holdings is rumored to be launching a credit card after it expanded its Genius Rewards program from Booking.com to include its other sites like Priceline and Kayak. In addition, rumors have swirled for a few years about a potential Airbnb credit card and in an interesting plot twist, banks are now promoting their own travel portals. It’s an increasingly complex ecosystem! More competition means better value props and that’s what ultimately makes this launch a significant indicator that reflects these underlying trends.
3. The new Mission Lane Gold Line Visa
New card NAME alert! This is the NEW Mission Lane Gold Line Visa. I say new name because we’ve seen direct marketing for the value prop before but not the name or card design.
- $4K credit limit
- No annual fee
- $200 cash bonus (for spending $500 in 3 months)
- 1.5% cash back
- 0% intro on purchases
- 26.99% APR
New approach:
- Moving to a tiered approach. Mission Lane (issued by TAB Bank) was spun off as an independent company in 2018. It targets consumers looking to build/rebuild their credit and claims over 3 million customers to date. Until recently, Mission Lane promoted the non-rewards Mission Lane Visa and a cash-back version of the card with credit limits ranging from $1K to $3K. The Gold Line Visa – with its $4K credit line – might be an initial test BUT if you look at Mission Lane’s website you now see an image of 3 cards (Regular/Gold/Platinum?) that indicates the unveiling of a new tiered approach.
- Signs of expansion. Mission Lane has been successful in offering credit limits up to $3K and now it is expanding beyond its tried and tested approach to appeal to customers who are further along in their credit-building journey. With a Platinum offer still to come (maybe), it is clear that Mission Lane has identified an opportunity and one that big banks might just have ignored. Others, like Upgrade and Mercury Financial, have also identified this opportunity.
4. Capital One commits to “meaningfully higher” marketing spend
Capital One spend on marketing will be “meaningfully higher” during the second half of the year according to Chairman and CEO Rich Fairbank on the Q2‘24 earnings call and will follow a “similar pattern” to 2023.
The comments sent analysts scrambling to get their calculators. Capital One usually has a very strong Q4 with 56% of its 2023 annual budget weighted to the second half of the year. Using that assumption we are looking at a total marketing spend estimate in excess of $4.7 BILLION for 2024.
Lots of great context from Rich Fairbank on the marketing but here is the most telling quote:
“It is not lost on us that competitive intensity and marketing levels at the top of the market are increasing and we know we have important investments to make.”
Big spenders
You have to spend big to keep up with the Joneses and that means really big when the neighbor next door is Amex and the one across the street is Chase. Capital One is clearly committed, but you have to wonder whether the duel distractions of Walmart (additional loss allowances) and Discover might prove to be too much of a headwind at a time when it needs to accelerate to keep up in this race.
5. Credit card as communication in a crisis
This is a true/personal story.
Last week, the economy of Bangladesh (170 million people in an area the size of NY state) screeched to an abrupt and painful halt as the government shut down internet/mobile communications and mandated a nationwide curfew to restore order after student-led protests were ignited by the restoration of a quota system for much sought-after government jobs.
How is this a personal story?
Bangladesh is 8,000 miles from New York BUT my wife and daughter were there on vacation visiting family! When communication was cut early last Thursday I knew they were in a safe place but, as the hours turned to days and the days proceeded to click by without a call/text/email and, seeing horrific news reports regarding the crack-down, I became increasingly concerned.
What happened?
Cash is still popular in Bangladesh but my wife knew that if she used a credit card during one of the breaks in the curfew when people were allowed out to get food, I might see the transaction and be reassured that they were okay
Amex didn’t work, so my 17-year-old used her Apple Card (thanks to Apple Card Family) and I saw a transaction in REAL TIME in my Apple Wallet that showed their exact location and even had a link to the store’s website.
It was a huge relief but that was the ONLY COMMUNICATION I had until they landed in Dubai to catch their connecting flight and could find the internet.
They were both fine despite their 6-day curfew experience and, thankfully, Bangladesh seems to be calming down. As for me, a few more gray hairs and I’m now getting better sleep.
What are the takeaways?
- Steadfast payment rails. Maybe we take them for granted and maybe Mastercard and Visa struggle to remind us of their relevance but amid a crisis and with all communications seemingly down, Mastercard processed that transaction that allowed my family to buy food and communicated to me halfway across the world that that they were safe. That’s crazy when you think about it. Thank you Mastercard!
- The Apple experience. I posted some weeks back about Apple Card’s new feature-led ad campaign and called out one ad (“Sweater”) that promotes the additional information that Apple provides on each purchase via Apple Wallet including the map, address, phone number, website, etc. I wasn’t sure of the value of that information. Now I am!