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Last month Mastercard announced a new partnership with Yoyo to bring its Pay by Bank App onto the high street. Mastercard SVP Jonathan Wood sits on the Rolphcast couch to discuss how this will enable more than 10m consumers to pay through their mobile banking apps, whether in-store or online.
Jonathan Wood’s experience in the alternative payment arena is unrivalled, spanning across all areas of client engagement, strategy and marketing over the past 25 years, with previous roles including vice president and head of emerging markets at American Express.
Jonathan joined Pay by Bank App in August 2016, which was bought by Mastercard the following year. As senior vice president at Mastercard, he is responsible for leading the wider commercial team in driving the continued integration of Pay by Bank app payment technology, including partnerships with banks, retailers and payment processors.
Hope you enjoy the episode…
You once described the Mastercard Pay by Bank App as: “a little revolution in payments with one button that will change the way we pay”. In a nutshell, how does it work?
I’m shopping online — I’m used to seeing a button that might say Mastercard, Visa, American Express — I’m going to increasingly see a button that says Pay by Bank App.
For me as a consumer, it’s just a button. So I press that button, that button and the clever technology that sits behind it sends me a request to pay from that retailer — it’s invoked through my mobile banking app — I use biometrics to authenticate — it’s at that point Strong Customer Authentication (SCA) happens for the payment geeks in your audience — and that’s most of them.
Yes, everyone who’s fretting about SCA.
Yes, so SCA is taken care of by Pay by Bank and I’m in my mobile banking app! I’m not in the screen scrape or a version of… I’m in my mobile banking app.
I see my balance in real time. As I mentioned I make that informed choice: so yes I’ve got the money, I want to pay and I press the button.
That money then moves instantly out of my account directly to the settlement account of the merchant. My bank balance is changed in real time with no notion of pending transactions — and crucially I didn’t send anybody my payment credentials.
They’re not going to get stolen, sold or misappropriated — I’m not going to see something in the news to say that my payment was intercepted and my credentials were stolen — that happens increasingly and we all worry about that now. So I’ve done it safely and securely, and the UX is super slick.
It’s actually not so much a revolution — although I did use that word — I probably think about it as more of an evolution, but an evolution of my mobile banking app. I use it every day and the great news is I can now use it to buy stuff.
If I’m a merchant, what’s going to make me say to my acquirer: “Switch on the Pay by Bank App button for me”?
A couple of things that rise to the top of the list are surety of payment for merchants — so knowing that the money is now guaranteed, because it’s moved instantly and irrevocably, is valuable.
The other thing that’s risen to the top of the list is the improvement in basket abandonment — so what we see across the retail merchants that we have now is about a 20 percent improvement in basket abandonment.
It is huge — and it’s a bold statement, so I do need to qualify it. It’s not actually the magic of technology that delivers that basket abandonment improvement — it’s the UX itself.
So if you think about what I said about press the button, mobile banking app, yes I’ve got the money, pay, money moves, go back to the retailer and the job’s done; there’s much less opportunity to get distracted.
There’s less friction points.
Less friction! It’s not like I’ll get bored because I’m inputting lots of information and think I can’t be bothered to do this and move on.
I also don’t see a 3DS box pop up because the strong customer authentication has happened when I went into my mobile banking app. So the UX itself explains the trimming down of the end-to-end transaction and that results in basket abandonment improvement.
It would probably be remiss of me — given that we recently announced a pretty significant partnership between Mastercard, Pay by Bank and Yoyo — to not delve a little bit deeper into what that really means.
If we accept that loyalty is a key driver of my behaviour and if we accept that I want to be loyal — because I actually believe as consumers we do want to be loyal — but you’ve got to give me a reason to be loyal. You don’t just get it, you can’t ask for it and frankly you can’t buy it — you need to engender that loyalty naturally.
Yoyo does! You have something super special — you are cracking how to engender that natural loyalty within me that translates into me being loyal to a retailer — be it Caffè Nero or PAUL or SOHO Coffee or whoever it might be — you’ve captured the essence of how to engender loyalty with me as a consumer.
What I saw — way before we ever met in why I had become loyal to Nero through my Yoyo app — it didn’t take very much for me to join the dots that with Yoyo, and how you’re innovating in the loyalty space — and actually how Yoyo, in here, thinks about loyalty — that was the light bulb moment where I believe this partnership could be valuable, helping Pay by Bank App users to naturally be loyal — and actually for the first time, because you know we’re not able to do this right now, is how do I buy coffee from Nero on the high street?
It’s quite difficult to buy and consume coffee on the internet. Nobody’s cracked that one yet, but with what we’re doing, I’m going to be able to prepay for my coffee in advance with Yoyo. I may get a deal or a discount while I’m doing it.
Directly from my banking app?
Directly from my mobile banking app, I prepay for four and I get one free, for example — I like that because I’m consuming coffee all day or all week.
I use my mobile banking app to pay — that’s terrific because I’m safe and secure.
Then I go onto the high street and I consume my coffee.
So for the first time an entirely digital mobile-orientated payment experience has translated to me buying something on the high street. I’ve never been able to do it before, I don’t think anybody else has done it before, I think we’ll be doing it together, and I think it’s going to change people’s lives.
Out of the gate, there is already over 10 million potential users of Pay by Bank, powered with Yoyo loyalty experiences. I can’t think of a single new payment system or initiative that’s ever come to the market who can say that, out of the gate this is the reach we have.
That’s not a hypothetical number! We already know the 10 million customers that will be enabled with Pay by Bank App over the coming months — 3.85 million of them are already enabled and the rest are coming by the tail end of this year.
That’s just the start of the millions of people that will be able to choose to use their mobile banking app and get their loyalty through Yoyo at a given retailer. That’s what’s so exciting — it’s not a myth, it’s not a PowerPoint presentation — it’s reality! And reality is quickly now coming to life.
How quickly do you think the adoption curve on this can be?
If I think about some of the some of the ways that somebody convinces me to do something, I often have to do something new or different — there’s a bit of friction in that element.
I think what you do, what we do, and why our partnership is so powerful, is that we’re not actually asking anybody to do anything different than they do it today. Folks do buy at retailers, they do want to spend their money, and your partners have millions and millions of people already choosing to use them.
What you’re doing is providing them with tangible rewards for staying loyal. I’m not asking them to do anything different either. I haven’t presented a new form factor or convinced them to do something in a different way that they may not want to do, but might think about it to get the benefit of that Yoyo loyalty.
So actually it’s the people using their mobile banking app every day, paying for stuff every day — but just using that mobile banking app to do it — and with Yoyo we’ll be serving up really good natural reasons to be loyal to their retailers.
Together we’re not actually asking anybody to do anything dramatically different. It’s go about your life as you were before, but here’s an even better way of doing it.
John, it’s been really good to chat to and get under the skin of the opportunities that exist now the world of Mastercard and Pay by Bank is really starting to motor.
I think it would be a good thing for me to point out, just in case you’ve got any of the senior people at Mastercard / Vocalink watching, that from an outsider looking in, I probably have an intimate knowledge of the journey of Pay by Bank — and you’ve mentioned it’s taken a while — I have to say these last three years, the energy and the direction of Pay by Bank is clearly linked to your coming on board and fostering what is a very difficult coalition to get all these parts moving. So I have to say a bloody good job well done and I’m super excited for what we have to come as a partnership. Thank-you very much for taking the time to come and chat with us today.
You’re welcome — thank-you.
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