By Günther Vogelpoel, CEO, Recharge.com
As a $3+ trillion market forming a key part of the alternative payment methods space, branded payments are seeing an astronomical rise.
This rise — in a swiftly-growing market few have heard of — transcends geography and demographics; consumers worldwide of all ages and income brackets are turning to branded payments to support their financial transactions as they navigate an increasingly digital landscape.
From gift cards to call credit, their rising popularity goes beyond just support and gifting. Most notably, branded payments offer a key way to manage budgets and protect data; being paid for in advance and limited to an allocated amount, they offer a flexible approach to engaging with brands and making digital payments.
Branded payments also allow those who have no access to regular financial means remain connected, largely due to the fact that they don’t require a bank account the way debit and credit cards do, making them a crucial option for the billions of people around the world who are un- or underbanked.
Beyond being a contactless way to pay for goods and services during this global pandemic, branded payments are becoming a key way for consumers across all demographics to make their desired financial transactions. A key trend that is emerging at full speed is the use of branded payments for personal finance, in particular managing budgets and spend.
By controlling the balance stored on branded payments such as a gift card, prepaid card or mobile top-up, consumers don’t have to risk spending more money than they’ve allocated — if their usage goes beyond what they planned or if they forget to cancel a subscription, the money at risk is limited to what’s on the branded payment and their loss of funds is capped.
With the subscription economy booming for products and services across all categories, automated payments are at an all-time high — and so is the risk of losing track of a credit card bill. Each month, direct debits are automatically deducted, contributing to the significant stress of financial worries. Branded payments offer users a way to spend on the subscription services they want by allocating the funds beforehand, reducing the burden of spiralling spend and the risk of automated payments ticking over budget.
The prepaid mechanic of branded payments also makes them an ideal introduction to the world of money for families. Often used as an alternative to pocket money or in lieu of monetary gifts, they can give those underaged or underbanked a chance to choose what they spend their money on while still limiting the money at risk, safely entering the world of finance.
The demand for privacy
As customers get savvier with their money, they’re also growing savvier with another key form of currency — their personal information. It’s no secret that data privacy concerns have risen to new heights in recent years, only further amplified by the data scandals concerning some of the biggest — and once most trusted — names in tech.
Users are more selective than ever before with what data they share and who they share it with; they often are — and should be — the first to question why some of their most sensitive information is even needed in the first place. Is your home address really relevant to stream a movie online? Is your date of birth really necessary to purchase shoes? Is the scope of data requested really imperative to deliver the goods or services you paid for? The scope of information required can be completely unwarranted, and customers know that with all the personal data they’re providing, it can mean they’re a product too.
Branded payments put the control back in the customer’s hands by giving them the freedom to use anonymous data when making purchases online. Using gift cards or prepaid payment cards as a financial source across multiple touchpoints, they can make bona fide financial transactions with minimal risk for fraud or data leaks — all without handing over their credit card details, date of birth, or full name.
But don’t get it wrong: masking data does not mean a consumer has something unlawful to hide. The right to pay for goods and services the way one wants to without sacrificing personal data should be a right, not a privilege. Consumers need to weigh the risks and ask the right questions: Is your personal data necessary to the purchase you’re making? Do the corporations asking for this data have the best of intentions? Do you trust them to have the security infrastructure in place to keep your data safe? No one should have to risk their information especially when the data they’re risking was never necessary to input in the first place.
Digital payments — on your terms
The prepaid mechanic lends itself to a plethora of new ways to stay connected, engage with brands and make digital payments in a world rapidly shifting into the digital space. Branded payments in their many forms are here to stay, opening up a world of opportunities and supporting consumers as they spend their money on their terms.