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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.

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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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