By letting customers reuse platform earnings or balances, refunds, rewards, and rebates for future purchases, you create a win-win for you and your users – customers get rewarded for shopping, and you get repeat business. It's a loyalty loop that keeps your customers coming back for more.
How to cash in on loyalty loops using a wallet infrastructure
Respending functionality can be built through a wallet or banking infrastructure, allowing buyers and sellers to collect, hold, and manage funds within secure wallet accounts. This stored value can be used as a convenient and cost-effective way to pay for future purchases, fostering a closed-loop spending ecosystem.
Benefits for buyers:
- Enhanced convenience
Buyers can access a more convenient way to pay. They can top-up their account through bank transfer, direct debit, transfer between wallet accounts, or use refund or cashback credits collected from within the platform to respend.
- Cost savings
Wallet balances offer lower transaction fees compared to traditional payment methods. When payment method fees are charged to clients, it can range from 0.5% - 3% of the transaction costs depending on the payment method used. Payments through balances, on the other hand, offer lower transaction costs for buyers.
Benefits for platforms:
- Over 20% reduction in payment processing costs
By leveraging wallet balances as an alternative payment method, you can reduce payment processing costs as you can let customers use wallet balance for their subsequent purchases, removing payment fees associated with card processing or other alternative payment methods.
- Increased customer loyalty
Reward programs and cashback incentivize buyers to make more purchases within the same platform. The more purchases they make, the more rewards they can collect. Rewards are typically stored in a platform wallet, allowing customers to easily use them for future purchases – no need to jump through hoops or deal with external bank accounts. This convenience keeps them engaged within your platform.
- Potential revenue growth
Respending functionality contributes to forming shopping habits driven by incentives. This ultimately drives customer lifetime value and average order value.
Ways to boost respending in your platform
Here are a few examples of loyalty and reward programs that help drive CLTV in your platform, reduce payment costs and boost revenue.
Building a respending functionality using Mangopay's wallet infrastructure
Mangopay is one of the leading payment providers in the EU that offers a programmable wallet infrastructure as a convenient and faster way to create wallet accounts for different platform users, such as buyers and sellers.
Using wallets for storing in-app credits or storage of value offers better efficiency in managing payments from end-to-end as platforms can program holding, management, and transfer of funds between accounts faster and in a flexible way.
With these capabilities, platforms can create different wallet types such as rewards, rebates and discounts to allow store of value in dedicated wallet accounts.
Here are features of Mangopay’s wallet infrastructure that allow platforms to access scalable and revenue-generating payment experiences:
- Virtual IBANs - Wallet accounts have virtual IBANs attached, allowing for faster transfers between internal and external accounts. This also means having access to local SEPA transfers within the EEA, enabling faster transfers and soon, instant.
- Compliance - Mangopay has an EMI license that allows us to hold funds on behalf of our users, securely and indefinitely.
- Programmable - Wallet infrastructure is programmable, making it a scalable solution for automating the distribution and transfer of funds within the platform. This allows for more flexibility in managing complex payment flows while saving time on manual payment operations.
- White label solution - Through a wallet infrastructure, you can create wallet accounts for its users. You can then generate revenue from fees charged on wallet facilitated transactions or conversions between currency wallets.
- Multi-currency - Mangopay’s wallet infrastructure offers multi-currency support making it a scalable solution for platforms that operate in multiple geographies. Platforms can issue multi-currency wallets to their users to localize their payment experiences or use them to mitigate FX risks by holding funds in the currencies they need and converting during favorable times.
Get in touch with us to learn how we can help optimize your payment experience and tap into new revenue streams with our wallet infrastructure.
Sources:
- Statista data on returns
- Bain & Company research on loyalty program