Stored Value in Eastern Markets

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In the run-up to Pay360Innovate we spoke to Alistair Gordon, founder and CEO, of ValuAccess, one of the companies pitching to our dragon’s den style panel of judges. ValuAccess is an established Asian stored value processor and distributor, with major operations in Hong Kong, India and China. They’ve got to grips with the major markets of Asia and have drawn on their success with distribution in Hong Kong to implement an effective cash to digital payment distribution strategy in India.

During our conversation, Alistair shared some interesting cultural insights about how ‘stored value’ is viewed in the Asian market. In Western markets, a stored value card is often assumed to be a gift card. In Asia, however, the gifting of cards is predominantly for corporate incentive use, although Alistair believes consumer gifting will follow soon. ValuAccess’ most successful retail branded programmes to date have repositioned the perception of stored value from gift to self-use. Closed loop dynamics in a self-use mode are used to deliver stronger customer engagement that attracts and incentivises consumers into repeat visits and increased spend. As Alistair explained, ‘You buy a cup of coffee in my store Monday to Friday on the way to work. If I give you five free donut coupons, by next week buying a donut will have become your routine. Now you spend more every day.’

The schemes have grown rapidly with the ease of use and uncomplicated consumer benefits, whether by behavioral incentives or other mechanisms such as bonus value on every load. The card itself can be replaced with a QR code on a smartphone, giving you access to your stored funds, rewards and bonuses through a simple scan of your phone screen at Point of Sale (POS).

‘It’s not just gift, it’s about using prepaid in a slightly different way. By taking what we’ve learnt about self-use stored value we develop stronger customer engagements for our retailer clients. Self-use delivers the traditional customer acquisition mechanism of gift cards and ongoing incremental revenue through repeat visits and additional spend.’

India’s economy is growing at an exponential rate, especially in the area of e-commerce and Alistair is already exploiting the exciting opportunities for stored value in India. ‘Over $7 billion has been invested in the top four or five e-commerce marketplaces in the last year. Amazon alone has committed over $2 billion for Amazon India. At the same time, the rapid penetration of smartphones means that most of the population use their smartphone for their internet requirements. It is here that Alistair sees significant potential in distribution and ValuAccess’ ‘cash to digital’ strategy.

In order to access the internet buying and entertainment opportunities, people will need to be paying online. But India is still a cash-based society and even those with debit or credit cards have concerns, rightly or wrongly, around the security of online payments. These fears are currently being accommodated by the option of cash payment on delivery, which accounts for 50-70% of all products being bought online. But this often incurs huge cost for the e-tailer and supplier as 15-25% of orders are returned.  ValuAccess’ business model gives consumers in India a mechanism to pay securely online, solving the problem for those currently reliant on cash. This also enables e-commerce players to be paid in advance for soft products such as cinema, travel tickets, entertainment and games.

 ‘Any opportunity to pay securely, anonymously and in advance is good for both the consumer and the retailer. By placing racks of cards of the major e-commerce brands in the local shop you are providing a mechanism for consumers to convert their cash into a secure digital payment, and for the e-commerce brand you are acquiring more payment-enabled customers.’ 

ValuAccess has already launched this initiative in the biggest hypermarket and pharmacy chains in India. Both retailers have expanded the program out of Delhi and are looking to establish it in multiple cities over the next few months. Alistair is eager to move forward on these developments, building partnerships with other retailers and local product providers.

Thanks to Alistair, ValuAccess operates effectively in Asia where the challenges on execution come thick and fast.  Localisation, solutions for enabling a wide spectrum of POS capabilities, complicated models for settlement for retailers with multi-tiered and highly complex structures are some of the challenges ValuAccess has had to overcome to make the programs work for their retail clients.  Alistair’s excellent relationships with retailers in some of the fastest growing countries economically, make ValuAccess a significant contender in eastern markets. Take the opportunity to meet Alistair and find out more on November 25 at Pay360Innovate.

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