Arroweye's technology allows customers at e-commerce websites to tailor gift cards, for example, with photos, messages and even the carriers the cards come in. Through its new program, called CustomerConnect, the Chicago-based company's technology can now be employed to generate and distribute personalized offers and discounts "on the fly," said Render Dahiya, President and Chief Executive Officer at Arroweye.
The company coordinates with card issuers and program managers to package offers with cards when they are shipped to recipients. So a person living in Chicago may receive 10 percent-off at a Chicago pizza franchise along with the card, while a Floridian may receive a discount to a Cuban restaurant.
Dahiya said such micro-marketing has been difficult for financial institutions (FIs) to achieve; they have access to big data, but not to the mechanisms for effectively making use of it. "The problem they've run into is they can't put that [marketing] idea into practice because the current traditional support systems won't allow them to target their messages that closely to the consumer," Dahiya said.
Dahiya characterized the payments industry's fulfillment model as stuck in the 20th century. FIs place bulk orders for cards and house those cards, along with card carriers and activation labels, in vaults as large as 12,000 square feet. When orders come in, workers count out the number of cards needed per order, then send the cards along for the printing of cardholder data and the encoding of mag stripes. Dahiya called it "an old-fashioned pick-and-pack operation."
If FIs want to change card designs or packaging, they are stuck with what they've already got in stock, or they can destroy it and take a financial loss. Dahiya said, "Inventory's a risk, whether that inventory is fruit at a grocery store or whether that inventory is paper, there is a risk that something changes and that [inventory] is no good anymore, and you have to write it off."
Arroweye's process works differently. "We created a way where when you place the order with us, we create the order from scratch in a just-in-time fashion with no inventory," Dahiya said. "And then we send it to the consumer. And what that opens up for issuers, for program managers, for other people in financial services, is the ability to tailor your messaging and tailor your card design even down to the individual who's going to receive it."
Dahiya sees many uses for Arroweye's solution. One area is compliance, such as when a new federal or state regulation mandates disclosures be added or changed. "Traditional customers now have to destroy any inventory they have in house when the new rule takes effect," Dahiya said. "And they now have to print new cards. And if there's a run on that, that could be a six to eight week process."
Arroweye reduces that process to three to five business days, according to Dahiya. "With us, since we're doing it with digital imaging, we go into our platform, we change the imaging that's going to be produced on the back of the card, and modify it so it's now in compliance," he said.
The U.S. transition to the Europay/MasterCard/Visa chip card standard is another growth area for the company. Dahiya pointed out that FIs' inventory risk goes way up because chip-embedded cards are 5 to 10 times more costly to produce than mag stripe cards.
"To all of a sudden go from a 25 cent card in the vault to a two dollar card – and they have 100,000 of them in the vault – that becomes significant risk," Dahiya said. "Our model again would be an on-demand model when you're not investing in the inventory up front. As card orders need to be processed, if they need to be customized, adding the chip and lighting the chip up will just be another part of our model."
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