Jehan Luth, CEO, Banyan
During the past few decades, consumers have learned to understand the difference between opt-in, opt-out, and even double opt-in processes. Millions of people sign up for online platforms or services by providing their personally identifiable information (PII). Consumers offer their data in exchange for offers, subscriptions, and basic services.
As subscribers, consumers expect to receive some security in exchange for sharing an email address. The simplest form is a second opt-in, which created the “double opt-in” standard, which provides explicit permission from the consumer. This happens, for example, when one downloads an app on a mobile device. Consumers often grant that permission reflexively, and many are unaware that this double opt-in is the de-facto standard.
Going beyond double opt-in
Most consumers understand that banks and other companies own their data when they sign up or check a box to agree to their terms. In turn, the companies that own the credit and debit cards that consumers carry in their wallets can use the spending data in ways regulated by the outlined agreement within the terms of services to which both parties agreed.
But today’s consumers are demanding more from these relationships. They want more control over their data. It’s not enough to earn 1% cash back on purchases or use points for travel. Instead, they want to pick the partners that access their data based on their best interests.
Companies like Klarna, the Swedish fintech (financial technology) company, capitalize on this trend by building bespoke relationships with retailers and creating special “buy now, pay later” offers for consumers. This strategy enables the consumer to bypass building new relationships with each retailer because Klarna has that covered. Such transactions can happen because Klarna “opted in” to the retailer’s API. In contrast, the consumer needs to only “opt-in” to the credit card issuer, or in this case Klarna, to allow data to be shared.
New middleware is coming that will enable merchants to provide receipt data related to consumer transactions. This data can be delivered directly to financial institutions (banks, credit-card companies, etc.) without requiring merchants to engage directly with each financial entity for pre-approved use cases. This middleware receives the receipt data from the merchant through its proprietary API or standard batch process and can then offer it to the financial institution. The financial institution can then execute the use case by issuing credit for card-linked offers or displaying the receipt within the banking app.
What is two-sided opt-in?
Two-sided opt-in requires both the merchant making a sale and the consumer requesting their data to opt-in for the exchange. No data is shared unless both consumer and merchant opt-in to the bank, credit card issuer, or consumer-facing app to request the data. Two-sided opt-in also places control for the interaction squarely in the hands of those involved in the transaction. And it will provide enormous benefits to consumers and retailers.
Consumers will no longer need paper receipts. Instead, they will be able to see each product in their credit card’s electronic item-detail history instead of the aggregated transactions and purchase totals that appear now. Consumers will also be directly notified of product recalls and can manage returns easily through an app instead of searching for an itemized paper receipt.
But the benefits for retailers are even more robust. Retailers utilizing two-sided opt-in will create a new revenue stream. Their customers will view product transactions down to the SKU-level — an ability that benefits every retailer, large and small. Even small retailers who leverage this data to create new revenue streams can see profits in the thousands of dollars per month. Larger retailers will build new revenue streams in the millions.
Through this technology, retailers will gain insights into consumer behavior, leading to new opportunities to market using far more granular trend analysis and deeper data. Savvy retailers will increase the effectiveness of their marketing spend by leveraging SKU-level data to deliver highly personalized, consumer-focused experiences.
The triangle of benefit: retailers, fintechs, and consumers
This triangle of benefit will soon become the standard, as retailers drive more revenue from data they had never been able to monetize while getting closer to their consumers. Banks and fintechs can gain more control over each transaction and be able to market against them. And consumers can eschew paper receipts and enjoy more transparency and control over their experience and finances.
It all starts with the new privacy standard of two-sided opt-in.
Banyan is an interchange for item-level transaction data collected from participating retailers.