South African banking groups are using the Internet to put a new spin on loyalty schemes and encourage online shopping
David Le Page Banks want more business. Internet vendors want more business. Both want fewer hassles with online credit card transactions. These are the three major imperatives behind eBucks and bluebean.com, the new Internet initiatives of FirstRand and Standard Bank. But what, if anything, do consumers stand to gain?
“It’s a lifestyle environment,” says Dave Parratt, bluebean.com’s director of Standard’s offering. Fortunately, these loyalty schemes – a description detested by the banks – offer more substance than image, though they shouldn’t necessarily be used quite the same way the banks would like you to. The essence of the services, and the most important part for banks and vendors, is that they can eliminate the insecurity of Internet shopping using a credit card. This is done by establishing a direct relationship between bank and vendor. Effectively, when you shop at eBucks or bluebean.com-approved retailers, you pay not the retailer, but the bank, on the retailer’s behalf. Those payments, obviously, are then forwarded to the vendor by the bank. But the online florist or sex shop never gets to see or store any credit card details, which is what makes conventional Internet transactions so potentially insecure. Ordinary Internet credit card transactions are treated by credit card rules as mail order/telephone order (Moto) transactions – which card users can repudiate anything up to three months later. Vendors also get hold of card details, which they can freely abuse.
Whereas both services give credit for online shopping, bluebean keeps a foot in the real world by being based around a credit card, which can be used through the bluebean website in secure electronic payments (SEP). This eliminates the uncertainty of Moto transactions.
But SEP payments are treated as advances by the bank, and do not get the 55-days-to-pay leeway that comes with normal credit card transactions. Bluebean compensates you by giving you two beans (worth 1c each) for every rand spent this way. Normal transactions only earn one bean for every rand spent. Bluebean also offers an unusually high interest rate of 9% on positive card balances – a bonus that means you’re probably better off not using SEP and just collecting your interest. That, of course, is not what bank or vendor wants. Bluebean.com does hope to create a single portal for all its vendors, eliminating the need for separate registrations with all vendors. That, should they get it right, would be an additional incentive for using SEP.
One of the strengths of eBucks is that you don’t need to be a FirstRand customer to make use of them. You also don’t have to be a credit card holder. eBucks is opening a door, albeit one only as wide as the list of its approved vendors, to students and others on the margins of the banking system. But if you’re not a FirstRand account-holder, eBucks charges 2% to turn your rands into eBucks. According to Parratt, bluebean plans a debit card facility, which should make his service similarly powerful. What do you gain by participating in the eBucks economy? FirstRand claims it offers anonymity, protecting customer information – but that’s only in the case of those vendors who don’t demand their own customer registration. It’s possible for people to e-mail eBucks to each other – but not to convert eBucks back to rands – making this service little better than online gift vouchers, and rather undermining the eBucks claim to being an “eCurrency”.
Ultimately, the eBucks portal should offer vastly simplified online access to all the services of the FirstRand group – Momentum, WesBank, First National Bank and Rand Merchant Bank. The portal also offers increased SMS services and e-mailed statements. For vendors, the eBucks- supporting software is installed free of charge, and does not carry a subscription cost. Transaction tariffs are negotiable, says eBucks head Michael Jordaan. Essentially, “we’re facilitators of e-commerce”, he says. eBucks will probably implement a new cellular service called WIG, ahead of bluebean. Through an upgraded SIM card, WIG will enable cellular banking services for cellphone users who do not have WAP phones. To a large degree, bluebean.com probably serves as a means of pulling in new Standard Bank customers. eBucks hopes more to get existing FirstRand customers to use more FirstRand group services. Meanwhile, behind the scenes lurks Nedcor, feverishly investing in digital technology companies. So far, these investments have proved to be of little visible value to existing customers. “We’re not terribly well understood at the moment,” says Nedbank’s Brian Peck. He says the Nedcor strategy has been to focus on preparing for business-to-business, rather than busines-to-consumer, e-commerce. The group has also been revamping its “back- office” systems, so that at some point, theoretically, customers should be able to track loan applications through the Nedcor digital bureaucracy. Nedcor also hopes to eliminate paper, in large part, even from the machinery of its branches. But Peck admits that users of Nedbank’s rather paltry online banking service have little to look forward to in the near term, beyond a couple of largely cosmetic upgrades. This will leave the spotlight on eBucks and bluebean.com. Parratt compares eBucks to Standard’s own Accolades programme, which was intended to encourage existing customers to use more Standard Bank services. He freely admits that “Accolades was a disaster, an absolute disaster”.
It remains to be seen whether the Internet ingredient will excite consumers sufficiently to push both these new banking loyalty schemes out of the disaster area.