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Günther Vogelpoel: Big Tech, Data scandals, privacy fears – and the rise of branded payments

Written by Günther Vogelpoel, CEO, Recharge.com

Around the globe, there is a rising concern surrounding data privacy, intensified only by the scandals committed by some of the biggest players in tech. They range from Cambridge Analytica’s unethical data harvesting from millions of Facebook profiles to influence US votes to the controversial Nightingale project to improve healthcare, in which Google gained access to health-care data from millions of people without their approval.

More recently, Apple and Facebook clashed over the issue of data protection and making money from digital advertising. Apple believes it is wrong to track people online when they don’t know they are being tracked for the sake of profit. It has therefore released a new software update for its IPhone and IPads that requires app developers to ask permission to track user’s behaviours across its App store, online and across social media. This has shaken the very foundation of Facebook’s commercial model. Facebook believes that limiting the use of targeted, customised ads based on tracked online engagement, will significantly impact the growth potential of many businesses, especially small companies.

Customers driving demand for privacy

Apple’s decision is a direct response to the customers it wants to continue to serve.  Consumers are growing increasingly aware of the risks of sharing personal information and demand control of who sees it and how their data is being used. They also want to know why the companies they engage with need the information they are asking for.

This is understandable. Digital platforms, products and services are often requesting customer information that is not at all necessary to provide the experience, service or product purchased.  In addition, the scope of data required is often not logical or in the customer’s best interest, making people suspicious of what their data is being used for – as well as worried about potential data breaches.

Governments are also concerned about the use of privacy, and in recent years, over 60 jurisdictions have proposed or enacted privacy or data protection laws worldwide.

The rise of branded payments

While tech titans battle out their differences around the issue of privacy, customers are taking matters in the own hands and finding new ways to engage with their favourite businesses without handing over their data.  One of the biggest trends to emerge is the rise in branded payments services, an alternative payment method that is rapidly being adopted into the digital space. Branded payments are essentially prepaid cards that give people access to their favourite brands without having to sign up for a subscription and hand over personal data. They include everything from egift cards for services like Netflix, Spotify to Xbox, to mobile call credits and prepaid payment cards.

Branded payments have a huge financial infrastructure, catering to billions of worldwide consumers – and the number of users is increasing as people become savvier about managing their personal data.  Prepaid cards are fast and easy to use – especially in digital form – and give consumers a more flexible way to engage with their favourite brands, services and platforms, enabling them to manage their privacy in a world that continues to adopt digital automation.

How branded payments can foster brand loyalty in a world of increasing data privacy fears

The use of prepaid cards has been around for a long time, but it has now become a superpower payment method that ensures that brands can attract and retain customers to their services by giving them more control over their data.

Companies can reduce some of the unnecessary data touch points associated with making a purchase by offering a branded payment gift card to pay for their products. This allows customers to use, for example, a prepaid payment card as a financial source across numerous sites and services. They don’t need to provide real data, so customers can buy a gift card anonymously for platforms that don’t truly need this data to offer the purchased experience.  Branded payment providers can also shield sensitive information including names, dates of birth and billing addresses so it is not passed on to any other party.

Of course, valid payment methods are required for these online transactions, but the great thing about branded payments is that it allows customers to make legitimate financial transactions without providing their credit card credentials.

This approach also minimises the potential for fraud.  In the case of a data breach a person’s real data is protected with branded payments, and should one’s payment details be stolen, the loss of funds is limited to what has been allocated to the branded payment, capping the amount of money at risk.

Anonymity is not just for bad guys

The benefits of branded payments make sense in a world where data protection has become a major concern. It also highlights the need to respect an individual’s choice for anonymity – and for brands to not become suspicious of people’s decision to keep data private.  Anonymous purchases do not necessarily mean there’s nefarious activity going on and masking one’s data does not mean a consumer has anything criminal to hide. They are merely protecting themselves from the threat of exploitation that can sometimes come from the corporations we trust the most.

Everyone should have the right to make payments however they want to — without sacrificing their personal data and putting their sensitive information in the hands of big corporations who may or may not have their best interests at heart and the right systems in place to protect them.

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