The proliferation of social buying sites likeGroupon, is threatening to become more white noise in the market,and so we have to ask what kind of lasting influence theseorganizations will have on payment forms? The answer could be quitea lot (for debit issuers in particular) since many of theseprograms depend on the type of retailer discounts that fall intothe sweet spot of debit transactions. These purchases include localrestaurants, beauty shops and nail salons, golf courses, and familyattractions.
The catch is that the payment form for these sites has to be usedonline to make these purchases and that’s where the big impact todebit programs may well be seen. As consumers become used tolooking for discounts using these sites, the advantage that onlinepayment forms like PayPal have, may become apparent. Our dataindicates that a majority of consumers who use PayPal do so becausethey believe it is a safer online transaction. As debit issuersconsider how to build value in their retail deposit franchises,they should be looking closely at how to assure consumers thattheir money is well-protected in an online buying environment andthat they are able to make cardless transactions conveniently andsafely.
Social buying sites will evolve like all retail forms and whilethe public may become more skeptical of the deals they offer, thesesites have become instrumental to reinforcing the consumer’s needto use an online payment form they can trust. Once merchants figureout how to stitch together their mobile/online sites with theirphysical POS, the fight for the heart of consumer’s everyday walletwill be on in earnest.
