Payments in Focus Insight that keeps you ahead of change

6 min read

What Issuers Are Doing to Foster Cardholder Loyalty Long After COVID-19

by: Gaylon Jowers
Friday, June 26, 2020

The coronavirus outbreak has reshaped the financial services industry, and that is especially true for card issuers. As the situation has evolved, we've seen our financial institutions and retail issuing clients display incredible agility and resourcefulness in responding to the marked shift in how consumers want to pay.

The ability to adapt to meet the new needs of their customers will create cardholder loyalty well into the future. As President of TSYS, the issuer solutions brand of Global Payments, I have the opportunity to look across a broad and diverse landscape of issuers, both in financial services and in retail.

Here are key ways this group is adapting to today's ever-changing economic climate, meeting their cardholders' new needs, and ultimately building long-term loyalty.

Contactless Cards: The perks of contactless payments were once framed in terms of convenience. These days, they're being emphasized for health and safety reasons. Though there's been a lot of discussion about the massive shift to ecommerce during the COVID-19 outbreak, physical retailers have remained open for essential goods and services. That includes paying with a wave rather than a swipe.

At TSYS, we're seeing a significant uptick in requests from clients for contactless cards as the world becomes more interested in “no-contact" commerce. New global research supports the broader implications of this trend. A recent study found contactless adoption will increase 6-8% more than originally anticipated prior to COVID-19, and more than 14% on a year-over-year basis.

COVID-Accelerated Contactless Increases - 6-8% more than originally anticipated prior to COVID-19 (Source: ABI Research). 14%+ more on a year-over-year basis.

As a result, many banks are issuing more contactless cards and sometimes even re-issuing existing cards to add the contactless functionality. Otherwise, traditional bank credit cards risk losing share to mobile wallets, which already have the contactless technology in place.

Installments: Offering installment plans at checkout has been a normal part of the retail experience in Europe for years – at TSYS, we've supported our European customers by providing this functionality for at least a decade. But in the face of widespread economic hardship brought about by the COVID-19 crisis, many financial institutions in the U.S. are accelerating this option with issuer-backed installment plans at the point of sale.

When a customer uses their credit card to pay, issuers can offer the option of splitting up payments into several installments – with or without interest, depending on the terms. Installments help consumers make plans for their budgets and stay on top of their cash flows, with predictable payments, interest rates and due dates.

"In the 'Age of the Customer,' issuers that adapt to their customers' new needs will create long-term loyalty." - Gaylon Jowers

Call Centers: Any downtime in a call center has major consequences for cardholders' perceptions of a brand. If there's one thing the COVID-19 crisis has made clear, it's how important it is for issuers to have an adaptable, flexible call center to deliver on their customer experiences.

During a time when cardholders are reaching out with more complex inquiries about payment schedules, fees and hardship programs, call center agents have become the human voices of our issuing clients. As stay-at-home orders went into effect, we partnered with our issuers to keep our call centers safe and give agents more space and flexibility to do their jobs – often at home.

Digital Banking: For banking customers who were not yet enrolled in mobile and digital banking services prior to COVID-19, the pandemic may have been the tipping point that encouraged them to make the switch. 12% of banking customers chose to enroll in online or mobile banking for the first time since the start of the global health crisis. For those who were already using mobile banking prior to COVID, 42% say they're using it even more often now.

When call centers were overwhelmed with inbound calls, many issuers proactively made statements reminding cardholders to access their accounts digitally at any time. These types of communications have increased cardholder satisfaction while reducing call center volumes.

Cardholder Risk and Recovery: Many consumers have unexpectedly become casualties of the economic fallout resulting from COVID-19. We're seeing many of our issuing clients work with their cardholders by offering relief programs like deferred payments, credit limit increases, extended deadlines and deferred collections.

These are all measures consumers are counting on. In a recent report from payments industry researchers at the Auriemma Consulting Group, more than seven in 10 consumers said they expect their financial institution to be more understanding of late payments during the coronavirus crisis.

Commercial Payments: With many offices closed, businesses aren't able to pay each other with checks in a timely, secure way. To reduce physical touchpoints while also streamlining the exchange of funds, many issuers are offering their commercial clients tools like virtual cards that integrate with the company's enterprise resource planning (ERP) systems for easier recordkeeping in a remote environment.

Issuer Responsiveness Leads to Loyalty Gains in the Long-Term

The coronavirus outbreak has placed new demands on card issuers, and they've quickly put forth solutions to help them stay agile and adaptive. As we look toward an economic recovery, I believe these tools and tactics will create customer loyalty that lasts.