According to the 2020 Digital Commerce and CLO Industry Study, today’s consumer is most concerned about saving money, convenience, personalization, and hassle-free yet secure shopping experiences. Card-linking is one way many businesses are choosing to provide those priorities for their customer base.

Through card-linked offers, consumers can earn rewards or cash-back options to use at various businesses simply by linking and then using a specific credit or debit card to make purchases. These rewards can apply to both e-commerce and brick and mortar scenarios, although in the past card-linked offers have largely been used to get customers “inside the building” at a physical store location (i.e. restaurants are one of the highest users and benefactors from this type of marketing).

THE FUTURE OF CARD-LINKED OFFERS

Although card-linking has been around for a long time, only in the past ten years has it really taken off. In fact, many businesses now favor card-linked offers and loyalty programs over every other marketing tool available to them, second only to social media. Businesses that are putting their time and energy into card-linking are experiencing results – a majority of them are seeing growth in their card-linking programs upwards of 50% in the last few years.

Card-linked offers, especially those tied directly into mobile wallets, clearly achieve results for the businesses willing to invest in them. Through card-linking, merchants can make their shopping experiences easier and more personalized than ever before. These offers and programs also drive sales for both new and returning customers across the board. Card-linked offers and loyalty programs are effective tools that can give both the consumer and businesses what they want, and it looks like they’re here to stay.

Companies can develop and run their own CLOs if they want, or they can partner with a CLO app or platform that provides rewards across a diverse spectrum of businesses. While several of these CLO platforms exist, there will be room for many more in the coming years as more and more businesses turn to card-linking. This is where finance technology steps in to do the actual work of connecting CLO apps with businesses and customers.

CARD-LINKING THROUGH OPEN BANKING

In the past, the connections between CLOs, businesses, and customers had to be made through traditional payment networks, like big-name giants Visa, Mastercard, American Express, etc. Those days are fleeting, however, and are quickly being replaced with something called banking application programming interface, or banking API for short. Rather than going the traditional, long, expensive route with payment networks, APIs can establish secure connections between businesses and consumers extremely quickly. There are many ways APIs can work, but one of the most beneficial ways for businesses is through open banking.

Open banking operates on the premise that people should be able to control who accesses their own financial information rather than the bank controlling access to their info. Instead of needing to ask for permission from their bank every time they want to share their financial data with a third party, with open banking people now have instant control to give permission themselves. It makes securely sharing information infinitely easier and faster.

Open banking not only gives power to the consumer; it also gives power to businesses through the data they now have access to. When customers opt in to open banking with a specific company or app, the company gains access to all sorts of additional information about those customers that’s not necessarily directly connected to that company.

While this may seem a bit odd at first (why would a small boutique shop want to know about my gasoline-purchasing habits? as one random example), it actually has all sorts of implications for innovation and shopping personalization. As businesses learn more specific information about their customers, they’re able to implement deals, develop new products, and offer new services that make a customer’s experience better. Data drives innovation, and that data can be available through open banking.

HOW TO START CLO PROGRAMS WITH OPEN BANKING

Maybe you’ve been thinking about where things are headed in the world of commerce and have realized that you want to get involved. Maybe you’re even already developing your own platform to connect consumers with rewards

If you do, then you should try Open Banking. Why? Here are a few good reasons:

• Access to the data is literally instant. Long gone are the days of tedious, lengthy application processes, contract reviews, and negotiations.
• Permission is given directly by the consumer. Stop wasting time asking permissions to the merchants, their lawyers, their POS company and their lawyers, and, last but not least, the payment network. Consumers own their financial data and can give you permission directly.
• Technology is now ready. Pentadata has a big role on this (forgive the shameless plug). We partner with the top financial institutions and best-in-class data aggregators and have developed a unified ecosystem through which we empower an endless number of use-cases. Yours could be included!

As you consider these possibilities, keep in mind that open banking is a proven recipe for success. Companies of all sizes use it, and many of our customers that abandoned the “old” CLO way to embrace open-banking have never looked back.

Here’s a to-do list that will take you from zero to a running-CLO-app:

First off, you need a simulated environment to test out your code and app.

We call this environment a sandbox, to mean that you can play with it safely and without worrying about mistakes, data leaks, etc. Go ahead and get your free access to our sandbox by clicking on this link.

Then watch out for an email with the instructions on how to connect to the sandbox and go through the interactive tutorial.

The tutorial will show you the code to query our financial and machine-learning APIs. It’s a very simple and standard collection of ~15 HTTP requests executed via cUrl.

Does it look too little like code? That’s right, and it’s because the API for open-banking and CLO is designed to be very, very simple:

1. Register the consumer.
2. Request a connection to the bank’s website to link the consumer account.
3. Fetch the linked accounts and transactions from each.

Once you’ve completed the tutorial, it’s time to get to work. Copy and paste the code that’s in the tutorial and translate it in the language of your code. We also have bindings for Python and Javascript. Follow the three steps above to execute requests to our system.

Next, keep testing using the sandbox. Even outside of the tutorial, you can use our sandbox as your personal test field. Your entire CLO application should work fine with the sandbox.

Finally, it’s time to get access to real data. You only need to reach out to us and we’ll provide you with the access for the production system.

At this point, you have your code up and running, and it works smoothly. You are able to fetch the transaction data from the linked bank accounts. Now you’ve got to match the transactions with the offers that your users have redeemed. There are two ways to do that:

1. Develop a matching logic yourself. To do this, look at some bank transactions that took place at merchants you partner with, and work out the details of the text descriptor so that you can match it in future transactions too. This is what most companies that use our open-banking API do – and it’s also what we recommend.
2. Offload the matching logic to us. We’ve serviced, in the past years, permissioned data that contains billions of transactions and, as such, we have some insight of what a matching algorithm looks like. We do not have a generic API for that, because it’s a process that contains nuances based on each customer and every merchant – so please get in touch if that’s what you’re looking for.

This last part can take a bit longer. If you have difficulties with running test transactions at some merchant then do not hesitate to ask us: we likely have some data from that same store.

SOME FINAL THOUGHTS

Whether the idea of open banking is brand new to you or something you’ve known about for a while now, hopefully this article has shown that it’s a route worth taking for your business. With incredibly easy implementation, it will give you data your company will benefit from from the very start, and ultimately keep your programs relevant and successful both now and in the future. Contact us today to get started.

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