With use of digital receipts on the rise, their potential for consumer insight is grabbing attention
- Covid-19 is accelerating the spread of digital receipts.
- And with the increase of digital receipts comes the increase of consumer data. Financial institutions and big tech want in.
With Covid-19 accelerating all things digital, digital receipts too have begun to tip-toe onto the scene.
In August 2020, supermarket chain Schnucks started allowing shoppers who were members of its loyalty program to choose between electronic and paper receipts. In October, Flux, a fintech that enables digital receipts, partnered with H&M to enable digital receipts at the clothing chain’s locations.
Digital receipts seem to have stretched into this year as well. In February, Flux partnered with Barclays to allow all UK Barclays debit card holders to choose electronic receipts following transactions. That same month, American Express launched its digital receipts feature for its U.S. users.
Digital receipts’ tiptoeing could turn into a confident gait. 81% of consumers reported that digital receipts would help them differentiate between fraudulent and legitimate transactions, according to a recent survey by Amex. At the same time, 79% of merchants said digital receipts could help them avoid unnecessary chargebacks or disputes.
“The reason we're doing this is to offer convenience and peace of mind to our current members, and cost reduction for our merchants,” said Ramesh Devaraj, vice president of global transaction processing and merchant policy at American Express.
The acceleration of online shopping due to Covid has led to increased worry about fraudulent activity on the credit card, said Devaraj. People seem to have a harder time remembering or keeping track of purchases when they’re all done online.
“When you make an online purchase, it's generally much harder to remember that purchase down the road, compared to a brick and mortar purchase, where you're more likely to remember walking out of a physical store with the purchased goods,” said Devaraj.
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Then there’s the case where customers make repeat purchases at a certain merchant, or share their account with family members and are unaware of all the transactions being made.
“For all of these reasons, when a card member comes across a charge in their credit card statement that they can't fully remember, they get very concerned,” said Devaraj.
But what makes the rise of digital receipts especially interesting is that both financial institutions and big tech are taking steps to tap into this field. And that could be because of the amount of data and consumer behavior insight that digital receipts can reveal.
Big tech companies are showing interest in receipt tracking, for example. Amazon’s Shopper Panel is a program that allows participants to earn monthly rewards by sharing receipts from purchases they made outside of Amazon.com. Google Pay promises to keep track of receipts made through online transactions by tapping into users’ Gmail and Google Photos.
“Big tech companies are recognizing that within individual purchase behavior, there's a lot of intelligence, and they are bringing that intelligence back to their end users,” said Danny Piangerelli, CTO of Sensibill, a financial data platform that analyzes receipts and primarily works with financial institutions. “And a lot of the financial institutions and adjacent groups like accounting and expense management companies are getting cut out of that.”
But even so, financial institutions seem to have first dibs on user data from digital receipts.
Financial institutions are still, for the most part, the most direct link to financial activity. Even if people are using other tools for financial actions, their transactions still link back to their bank accounts. Big tech doesn’t have that same front door entry.
“Google, Amazon, these others -- they don't inherently have the financial institution data. You as a user have to allow them access to that information,” said Piangerelli.
Then there’s simply the matter of trust. Piangerelli says there is an inherent trust consumers have in their financial institutions that doesn’t yet exist with big tech. While consumers are increasingly trusting with big tech when it comes to things like pictures, their spending and financial activity is another story.
“We're not convinced that there is the same level of trust, specifically around financial details with big tech as there is with financial institutions,” said Piangerelli.
But this might not necessarily be forever. While financial institutions may have the upper hand when it comes to trust, big tech could start leading in terms of convenience. Financial institutions may have to work on proving that they are as convenient as they are trustworthy.
“Google, Amazon, Apple -- these guys are clearly working on user experience, they're clearly working on explaining why they can do something useful with that data for their customers,” said Piangerelli.
“The financial institutions have to keep up with that. They can't just rely on the trust.”