Flourish in a Flash: International Branded Currency and Alternative Payments Trends
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You’re listening to the Flourish in a Flash podcast with the Flourish team, Dez, Holly, Kristen, and Erika.
Hello everybody, and welcome to another episode of our Flourish in a Flash podcast. We are very excited to have a guest joining us here today. This is Kristen Thiry, cofounder of K+H Connection and the Flourish Conference, and I’m here with my other cofounder, Holly Glowaty, and our special guest, Todd Tomlin with Consummo Consulting. Welcome, Todd. Thanks for joining us.
Thanks. Glad to be here.
Great. So Todd, we go back a while in the industry. We all are buddies and friends and have known each other for a while and have seen lots of changes in the industry and lots of changes in our roles and responsibilities, and I know Consummo is a relatively new venture for you. Can you tell us a little bit more about Consummo Consulting?
Certainly. I started Consummo Consulting about a year ago. A little tidbit: “consummo” means “perfection” in Latin. I really started to take a look at the branded currency sector and see where I could assist gift card program managers, service providers and their biz dev needs, and really any aspect of a gift card program that could cover anything from operations to marketing to distribution, business development… That's where I started. Where it’s led over the past year has been much different. We’re still doing a lot of things in the branded currency space, but branching out into eSports now. We’re doing sponsorship and partnership opportunities for an eSports team called East Coast and looking at other loyalty and consumer marketing opportunities, primarily in the travel sector, so airlines, hotels, online travel agencies, etc.
That’s awesome. What led you to start Consummo? I know we’ve all been working together in the branded currency space for a while, but can you tell us a little bit about your background and how you got to this point?
Sure. I was with Hyatt Hotels for about eight years, first in their loyalty program overseeing their Diamond member program and then did a little in their co-brand credit card marketing. I moved from there in Hyatt to oversee their gift card program for about three years and then moved over to Hotels.com where I managed their gift card program for about three years. After that, I decided to go out on my own. Actually, I fundraised for a personal venture building luxury vacation homes in the Seychelles islands. It sounds pretty random, but I was literally cutting down cinnamon trees in the middle of the Indian Ocean for weeks on end with my business partner.
It looked amazing on Instagram, I just got to say.
It really did. I was very jealous.
Looks and feeling are quite two different things when you’ve been cutting down cinnamon trees on five acres of land for eight hours. There was one day where I actually lost my lunch over a granite boulder because I was overheated.
Oh my gosh.
Anyway, I digress. I completed the investment that I was responsible for overseeing for my business partner and then I wanted to go back into business on my own, so I transitioned into starting a gift card consulting business.
That’s awesome. Obviously you have had this nomadic lifestyle for the last couple years, which I think is part of what’s led you to where you are today as well. Can you describe a little bit about that and what that experience has given you and how that translates into what you’re doing today with Consummo?
Sure. About three years ago, I sold my condo in Chicago and began traveling at the same price (from a lodging perspective) as it would have cost to rent an apartment in Chicago. I began traveling to a different country every month, and I think I’ve been to like 45 countries in the past three years. But what that’s allowed me to do is gain exposure to various different cultures and uses of prepaid and branded currency. I'll spend a month in Japan and see the fact that when you go into a 7-11 there, you have literally 50 different payment options and there are all these little logos at the cash register. It’s so crazy. And then you go to Thailand, and it’s kind of the same situation. But it’s really been neat to gain exposure to what is happening in third party and what retailers are selling, how different brands are leveraging their gift card programs or not, or a lack thereof, and really consumer behaviors of payments overall, not just in the gift card space.
That’s super interesting to me because I think the US is built on such traditional banking and payment rails that when you do go to other countries, you’re able to see there's a lot of other opportunity and interesting technology. For you, has that meant that when you're working with these customers, you've had to learn a different way of approaching how you might launch a gift card or attach it to anything that they already have existing? Have you found that it's a different process for you, or do you still find that it's pretty similar?
It's definitely a different process while leveraging what I've learned in the US, UK, and Europe. What it does do is allow me to continue educating myself on what's happening elsewhere in the world. For instance, I met a large Asian airline when I was at a conference in Kuala Lumpur and they want to start a gift card, but they had all these questions around what does it mean when it comes to airline payments, and they were throwing out all this terminology about things that are happening within their region that I’m not familiar with. So now they're partnering with me to educate me on the payment structure of airline payments in Asia so that we can ultimately find if we can put together a traditional or nontraditional branded currency product for them. Again, it’s exposure to payment structures and cultural things that I might not have been exposed to when I was in a more Western world, if you will.
Yeah, I hear that. I think it's really fascinating that you have to approach payments so differently depending upon what part of the world you're working in. And I think a question that we're starting to see pop up more and more really is, what does it mean to be a global brand or have a payment that can be accepted in different parts of the world? It's a big, hard question to answer because it is really just something that's so very different depending upon where you're at. I think it's very interesting that even just by sector, it's going to be different—that you have to learn something for airlines that may not necessarily apply for a traditional retailer.
Absolutely. And the challenge I have with myself sometimes as I might be talking to a potential client, advising them on how to start a prepaid card in other countries, and I find myself saying, “Maybe you shouldn't start a prepaid gift card in another country.” It’s me melding my services to speak to what’s relevant for the country that they’re wanting to go into as opposed to, “Oh, this is the tried-and-true playbook that we roll out when it's time to do a gift card,” and either starting a gift card from scratch or in a country that has traditionally had prepaid—for instance, in Hong Kong. The transit there in Hong Kong is all run on an Octopus card. An Octopus card is a prepaid tap-as-you-go card that when you’re riding the subway or buses in Hong Kong, you tap in and out on that train or buses. But the Octopus card is also accepted at all of the major fast and casual restaurants, all of the drug stores, all of the grocery stores. So Octopus is now your prepaid tool to use for payments anywhere you transact on a regular basis throughout your day. So let's say you're at McDonald's. McDonald's accepts Octopus card, but let's say that they didn't. If McDonald's wanted a gift card, I wouldn't necessarily tell them, “You need a gift card.” I would say, “You need to participate in Octopus.” It’s kind of doing those partnerships as opposed to propping up a traditional gift card program.
And that is a very different view than I think most people are able to take on our industry in particular, because I think we are very product-based in our thinking in the US versus, what's the service you're trying to provide? What's the end goal? Because a lot of times we get people who come to us and say, “Well, we just need a gift card.” You're like, “Yeah, but why?” I know everyone on this podcast right now would agree, you cannot just set up a gift card and it'll run itself. It's not going to happen if you want it to be successful or even really stable. So that is really interesting. It makes me start thinking about what kinds of thinking and philosophies are there that you can take from these other markets and say, “Oh, we should really be applying this to this Western view that we have on gift cards.” I love that you're looking at it and saying, “Maybe this product isn't right for you,” because payments have advanced beyond a piece of plastic in some places. In the US, we're still very dependent on the physical. I did a podcast two years ago with someone who's based in the Philippines, and he thought I was nuts that I was talking about gift cards. He was like, “Who uses a piece of plastic anymore?”
And I was like, “Everyone here does!” And he’s like, “No, I haven't been home in ages!” I was like, “Well, we're still doing it.” But it is just so vastly different, and I think we get very insulated in our thinking.
Certainly. Octopus is one example. Rabbit in Bangkok is another. Rabbit functions the same exact way that I mentioned Octopus did. But similar to what you said of needing something physical, so then you have GrabPay. Grab is an Uber competitor throughout Asia. Similar to what I was just describing for Rabbit or Octopus, GrabPay is your digital wallet that is on your phone that you use to pay for all of your transportation. My favorite Grab in Bangkok is jumping on the back of a motorbike. It’s super fun to pay with my GrabPay, get on a bike, and zoom through the streets of Bangkok to go to dinner. But anyway, that same GrabPay functions like Apple Pay, but it's GrabPay. You tap your iPhone at McDonald's or Starbucks or Coffee Club or all these different retailers, but it's Grab that's managing all of your payment. So again, why would you have a gift card for any of those retailers when you just tell people to give me GrabPay money? And that’s on a form factor of a phone as opposed to having any plastic.
Yeah. What do you think? I've had this conversation with a couple of people in different capacities. Why do you think the adoption of paying with your phone is being picked up much more quickly in other countries than it is in the US? I feel like here, there's still kind of a trust issue, or maybe it's just that people don't feel as confident—and maybe that’s same thing as trust… But I kind of struggle with this. Is it just infrastructure? Or do we think there's something culturally that's just different and maybe more open to this alternative payment?
I don't know. That's a good question. I would say it's more cultural. If you think of how people hang out on their phones in the US, like when you're walking down the street or sitting on a bus or waiting in line somewhere, every single hand in Asia has a phone at all times. And they're all staring at it, no matter where you are. If you're not doing it, then you have to be watching out for people that are. The phones really seem to be an extension of their body in the Asian cultures. And that’s strict observation. I think it's just natural. I mean, it's already in their hand. They already have it out; they don't even have to pull it out. This was actually in Berlin, but I saw this new fashion statement where everyone wears their phone on a necklace around their neck.
Oh my gosh.
It's like a clutch little thing. It's like the Flourish badges, like if I’m at Flourish and I have my little badge with my name. Well, there's this holder now that's your phone, and you just pick it up and look at it and then you just drop it, and it's hanging as a necklace around your neck. So again, the phones are just so easily accessible as opposed to pulling out your wallet, pulling out a card. I just think it's much more convenient. But we haven't figured it out yet in the US.
Yeah. We’ll start a new fashion trend, guys, here in the US where your wear phone around your neck.
It's so interesting. Obviously, you've had a lot of experience with all of your travels with the payment infrastructure in those other countries and other regions, but you specifically focus on the travel sector as well, talking about airlines and hotels and travel agencies. Can you talk a little bit more specifically about where you're seeing the innovation in that space as well?
Sure. I focused primarily there just because of my experience with Hyatt and Hotels.com. I did spend the better part of 2019 representing a gift card called TripGift, and it is a gift card that is good towards payment on virtually any airline, booking, hotel, car rental, cruise line… I think the travel sector, for the longest time, has not paid attention to the prepaid space, and I've always been a big proponent to increase that awareness. Delta has done a really good job with their airline program, which continues to grow by leaps and bounds. Southwest is around. There are some other ones that I'm working on that I can't mention, but I might be seeing some more coming out soon. I just think it's a sector for growth, for one. So, whereas you have the quick service restaurants, retailers—they are tried and true and have a few percentage points of growth year over year. The travel sector can grow by 10% or 20% because there are so many new entrants into it. And with millennials especially, experiences are more important than things, and if the travel sector can embrace that and also pair that with prepaid or some type of branded currency, then there's a real opportunity there. In terms of innovation in prepaid or branded currency, one thing that I've seen really interesting of late is this concept of microloans on travel-related purchases. There are companies like Uplift, Jeffity… I don't think they're doing it specifically in the travel space, but Uplift in particular allows you to spread the payments of your vacation over three, six, nine, 12 months of payments, and it's a microloan. And what they're finding there is that people are actually spending more on their vacations than they would without that product. And it's quite often middle- to upper-income people that are using the product instead of nontraditional or people that might have to put it on a credit card. For instance, you might spring for an upgraded room that’s more expensive because, “Hey, I can finance it over 12 months instead of having to put it on a credit card and pay it off next month. I'll do that.” So they're seeing quite a bit of Uplift on overall the size of basket and the purchases associated with this.
That's super cool. I would totally fall into the camp that would do that.
Me too. I was thinking about that, like, “Where should I go next?”
Well, they tell you, “If only for a hundred dollars more per month then you can stay in the ocean view suite…” And you’re like, “Sure.” Whereas paying that $1,200 right now, today—you wouldn't do that, right?
Spread it out over 12 months, and yeah, you'll spring for it.
So interesting. It’s so interesting to see these trends, and maybe that doesn't necessarily fall directly in the branded currency category, but it kind of does because you’re giving them access to a specific merchant to spend a little bit more and use these types of platforms and programs. I think those are the kinds of things we love to see—the innovation within the space. It's not just a gift card. It's other types of payment vehicles thatyou're seeing all this innovation. That's interesting.
Kristen, you and I have talked about this before. I think one of the great things about branded currency is that it offers access, whether it's a gift or whether it’s giving yourself the opportunity for an experience, like Todd is describing. There isn't a lot out there that gives you this opportunity without it feeling like, Oh, should I be doing this? Maybe you don't want to rack up credit card debt, right?
You can do this microloan where there's this finite end to the loan, and it's not long term. This is cool. I think when you have this broader view of what it is that this industry can do, then you get really cool opportunities, like you're describing with Uplift. And Todd, I think it is really exciting. I do think you're right; we're going to see a lot of innovation come out of hospitality and travel in particular, because there is just so much opportunity. And you're right; experiential is everything right now. It's all that anyone talked about it NRF and we had a ton of topics on it last year at Flourish, but we're going to still continue this conversation. It's going to be, what is the experience?, because it can be very different in different contexts, verticals, and sectors. I'm really excited to see where this goes in the areas that you focus on in particular.
Me too, and there’s only room for growth. By the way, I’m not representing Uplift or anyone, but I just think their products are really cool. But even their repeat rates are huge. I think I saw a stat that like 25% of the customers that participate in an Uplift travel-related microloan come back and do more. And that's after they've already paid it off. They're not overextending themselves.
And I think that's the difference of using a payment vehicle like that—that's a microloan that maybe has a smaller APR, or maybe even some of these offer no APR as long as you pay it off in the designated time. It's different than putting that $1,200 (like you were talking about in your example) on your credit card and paying upwards of 20% or 25% APR on that. You're less likely to do that because you're feeling the hurt a little bit more than something that's a more installment loan base, that's a lower APR. You feel like, Okay, that's more doable and I can finance my one big vacation a year, or whatever it is for you, in this way that's a lot more attainable and a lot more reasonable.
Yeah, and I haven't seen anyone do it well yet. Maybe we just haven't tapped into consumer desire yet, but I've always noted the fact that perhaps people buy gift cards for the purpose of saving for something. So, they're going out to their grocery store every paycheck or once a month and buying a $50 or $100 gift card that, ultimately, they plan to collect all those together, and then over 6-12 months, then spend them all. And maybe converse to the Uplift model where they're giving you all the money up front, maybe there are incentives that we can give consumers where, if you go on some type of savings plan towards our branded currency, then we incentivize you somehow—be it a percentage off or top-up value, etc. Amazon, I think, is probably doing something like this, but you can have them provide banking details as opposed to credit cards and then you as a brand are lowering your interchange costs to process those gift cards, in addition to fraud. You would have someone that's willing to commit to you in a six- or 12-month period, to do business with you and buy your gift cards.
Well, Todd, when are you going to launch this product? Because I think we really need this. It sounds reminiscent of other products I've heard of in the past, but I don't think anybody's doing it exactly this way that you're describing. I absolutely agree that if you designate funds towards a certain merchant’s branded currency to save up for those larger purchases, I think there's a real appetite for that, especially in the travel industry where there are those higher-ticket items. So yeah, this would be awesome. I think you're on to something.
It’s almost like using group-gifting technology, but for yourself. Holding this value for maybe a couch or a trip or something like that. It would be really interesting. You’re right. Todd, you hit it on the head because people kind of danced around the idea, but you're right. I haven’t seen anyone do this use case really well.
And I think consumers are eliciting that behavior today. It’s just, we need to define it and then create marketing around it.
Because I don't really know that we need too many systems in place. It shouldn't be too hard to create up scheduled purchasing.
But there needs to be good marketing and we need to name it somehow.
Yeah. I even like the idea, like you said, of attaching a bank account so that you're doing ACH payments so that it is a lower cost of funds for the merchant. And maybe you could even do something where it automatically comes out of your bank account every month, kind of like contributing to your retirement or other things that just happen automatically. You’d do something like that for financing your travel. I think that's so smart.
I love it. And this just shows there's such a need to constantly reinvent the way that we're thinking about these pieces of technology. It’s like you were saying, it’s not like we have to have a ton of new systems in place. It's literally just rethinking about the platforms, the products, the connections that we already have. How do you repurpose them for an audience that is of today? And that's the thing. I think there's so much opportunity right now if we can just get creative. That’s what's so exciting about being in the branded currency space today. If anyone's shown us that you can make a gift card something insanely popular and revenue-driving, it's Starbucks.
Again, it's because they looked at it differently and said, “Well, let's see how we can measure this so that it does benefit us, and more than just another product that someone has bought.” I think this is what's really fun about these conversations, that we're at a point where people are asking for it without specifically asking for it, but they're doing it. They're creating behaviors and creating these habits that should point all of us in the direction of doing something innovative.
Certainly. Well, I'll put a label on it and then I'll do a road show and sell it to everyone.
Sounds like a plan.
Copyright: Todd Tomlin. We're just going to throw that out there.
Awesome. Well, any final thoughts on this topic? I know, Todd, we're excited to have you join us at Flourish again this year. We'll definitely continue the conversation then. If you guys have been enjoying this topic, definitely come join us at Flourish, March 16th through 18th in Chicago. Todd will be there along with many other esteemed speakers. We look forward to continuing this conversation and more there. For details, go to FlourishCon.com. Todd, thank you again so much for joining us today. It was a pleasure having you. This wasa great conversation and I look forward to hearing more at Flourish.
My pleasure. Thanks for having me.
All right, take care of things.
Flourish in a Flash is produced by K+H Connection, a branded currency consulting firm. You can learn more about K+H at KHConnection.com. And you can always find out more about Flourish and the Flourish Conference at FlourishCon.com, or follow us on all of our socials. On Twitter, Facebook, and LinkedIn, it's @FlourishCon, and on Instagram, it's @flourish_con.