In our tech-driven era, there are a ton of payment solutions available out there. While many of them offer similar features and have a wide variety of benefits, it is crucial to understand how they impact your business. Closed-loop payment systems are one of them. Implementing them can do wonders for your business.
Read on to find out more about closed-loop payments.
What are closed-loop payments?
Closed-loop payments allow customers to preload a specific amount of funds into a dedicated spending account. This could be in the form of a device, such as gift cards, store-specific cards, and closed-loop electronic wallets. In general, closed-loop payments are less costly than open-loop payment systems.
With smartphone user bases growing, closed-loop payment system companies allow consumers to manage their accounts or gift cards, view their balance, and top up funds with a few quick taps.
Why should your business adopt a closed-loop payment system?
Before you go ahead and choose a closed-loop payment system company, let us help you understand what you stand to gain as a business:
Analyse Customer Behaviour
Closed-loop payment systems provide a large amount of relevant data that will help you understand where your customers spend, what they spend on, and what can drive more spending. This allows you to tailor your organisation’s marketing strategy and product portfolio towards specific demographics based on their purchase habits. This further enables you to create more personalised offers and promotions that are likely to help increase sales and, in turn, your total revenue.
Increase Customer Reach
Gift cards are a hassle-free gifting item, especially during the holiday season, especially when there is a lack of time to buy personalised presents. Customers who purchase your gift cards can preload them with a specific amount and gift them to friends and family. This has two benefits: it compels people to buy from you and helps people become more aware of your business. With cutting-edge tech and geo-targeting, companies can even send prompts and alerts to customers that are in the vicinity of your store.
With constant data inflows and an excellent customer programme, businesses can develop personal relationships with their customers by customising their experience. Promotional offers, reward points, and customer loyalty programmes for customers who use your closed-loop payment systems result in a more engaged, loyal customer base.
Using gift cards, e-cards, and mobile wallets mean your customers have already spent the money with your business. The moment they purchase these cards or load their wallets, the money is as good as in the bank. Even if customers forget to redeem their gift cards or use their wallets, you’ve already earned money. Furthermore, when customers have already invested in closed-loop systems, they are very likely to keep coming back.
Why doesn’t everyone use closed-loop payment systems?
This business decision requires understanding both sides. While there are limitations to closed-loop payment systems, the benefits gained through improved customer loyalty far outweigh them.
When you opt for a closed-loop payment system, you need to ensure that your marketing and promotional efforts are transparent and are helping your customers understand its benefits. Add bonus and redeemable reward points, offer a limited-time discount and give them reasons to jump aboard. Awareness, education, transparency, and integrity are the best ways to get your customers to buy into change.
Additionally, one of the most critical factors in implementing a closed-loop payment system is finding the right service provider. Your business must have a partner with a robust network and security systems who understand your business requirements and consumer base.
With Innoviti Technologies, you don’t just get a service provider that is connected to more than 110 banks; you get a partner that collaborates with you and helps your business grow. You know you’re in safe hands with smart analytics, a growing network, and 24×7 customer support.