From Card-on-File to On-Demand Payments: New Payment Model and Strategies For Payment Providers


Consumers are moving to on-demand payments and card issuers and merchants must respond to remain relevant

Mercator Advisory Group identifies the unique nature of on-demand payments and makes recommendations to payment providers how to remain relevant

Author: Tim Sloane
Published on: April 13, 2016

Research from Mercator Advisory Group titled From Card-on-File to On-Demand Payments: New Payment Model and Strategies For Payment Providers identifies how card-on-file solutions have been given a new lease on life and are now the primary consumer method for making payments via mobile devices. The report describes several examples of third-party solutions in this model that enable consumers to better control and manage their payments. Examples are also given that show how card issuers have responded to on-demand payments in a tactical way but have so far failed to grasp the strategic implications of this model.

“Sometimes changes in technology and consumer adoption occur so slowly that both the nature of the change and the magnitude of the change are misjudged.” said Tim Sloane, VP, Payments Innovation, and author of report. “On-demand payments may appear to be a simple extension to traditional card-on-file solutions, but nothing could be further from the truth. On-demand payments are a significant shift in the way that consumers prefer to shop and buy and the way that merchants push the payment process into the background. With the issuer’s brand almost invisible at the point of purchase, issuers need to identify new strategies to remain relevant to consumers.”

This report is 21 pages long and contains 7 exhibits.

Companies mentioned in this report include: Airbnb, Amazon, American Express, Apple, Betterment, Braintree, Capital One, Facebook, Final, Google, IBM, Lyft, MasterCard, Mint, Netflix, PayPal, Personal Capital, Snapchat, Spotify, Square, Stripe, Trim, Twitter, Uber, Visa, and Wealthfront.

Highlights of the report:

  • Identification of industries once thought to be impervious to disruption that are now being radically reshaped due to smartphones and on-demand services

  • Evidence that the on-demand payments model is the primary driver of the explosive growth in digital payments volume, further displacing cash and check transactions

  • Explanation of the three trends that drive the growth for on-demand payments

  • Examples of third-party services that have captured cardholders by providing services that enable the consumer to better manage on-demand payments

  • Specific steps that issuers should take to move from the tactical efforts in place today to a strategic response required to remain relevant with cardholders in the long term


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