Private label debit is all about creating branding, loyalty and an excellent customer experience. And, yes, it can also save retailers hundreds of thousands of dollars a year in credit card processing fees. In fact, the demand for these services is so high, that PDI recently acquired ZipLine, a leader in private label debit and mobile payments.
Today’s consumers expect convenience wherever they go, whether they are at the pump, getting a coffee or ordering online. When a private label debit payment happens smoothly and seamlessly at a convenience store, and it is incorporated into a loyalty program, it becomes integral to the consumer and brand experience.
Let’s take a step back and understand why private label debit solutions are important to both the retailer and the consumer.
It Costs Less
Typical electronic payments in the U.S. have been driven by Mastercard and Visa. Over the years, there has been a significant value proposition between loyalty and credit cards such as point-based credit cards, cash-back rewards or travel rewards – just to name a few. Consumers felt obligated to use their credit cards at the pump or in the store to purchase gas or other items because they were getting something in return for the transaction.
But, did you know that according to the 2019 NACS SOI Report, the total profits for the c-store industry were $11 billion, and total fees for the year equaled $11.8 billion. Practically all of the profits for c-stores were eaten up by credit card processing fees – one of the largest operating expenses for retailers.
Some stores now even hang signs in their windows letting consumers know they have to spend a minimum amount to pay with their traditional credit card. Other stores will give consumers a lower price if they pay with cash.
This is because the c-stores are actually paying big fees to support traditional credit card transactions. However, when retailers and consumers utilize a private label debit system, they interact with a closed loop program that doesn’t touch MasterCard or Visa – creating tremendous savings opportunities. The private label debit transaction is as close to a cash-based transaction as possible because the c-store takes the payment directly through ACH processing.
Last year, working with many c-store operators, Zipline (which is now part of our Marketing Cloud Solutions) was able to help save customers $50 million in interchange fees –providing real value.
It Creates Loyalty
In addition to saving the retailers money on fees, implementing a private label debit also provides a funded way for retailers to create loyalty for their customers. It incentivizes consumers to come into a store and use that particular payment method – taking advantage of the closed loop payment system once again and getting all sorts of perks just for using their private label debit system.
Some perks can include 10 cents off per gallon to pay for gas (a tangible benefit and one that resonates with the consumer), a free carwash with five fill-ups at the pump, or even a two for the price of one coffee and donut from inside the store. With these immediate perks for loyalty, why would a consumer not get hooked on using their private label debit if they are getting a cheaper price at the pump for using their branded card?
It Offers Convenience
Private label debit also offers a frictionless and contactless payment solution, which is growing in popularity, too—especially with the healthcare crisis. It is easy for consumers to drive up to their local gas station and use the app that sits on their phone without ever having to reach for a card or swipe it on the POS system.
C-stores have not had the capability (until now) to tie so many elements together and create a strategic offering for consumers that will also save them on operating costs. We see big opportunities around value and synergies between payments and loyalty – and this industry is just getting started.