The Next Financial Evolution Centers On Stored Value Infrastructure

$360 billion in loyalty points alone sits unspent globally, according to Gartner—and that’s before you count gift cards, refund credits, promotional balances and rewards. The financial infrastructure to unlock that value already exists. What’s missing is the layer that connects it.

For today’s consumer, stored value is active financial infrastructure—regularly deployed to save, budget and extend purchasing power.

Businesses are also depending on stored value to drive engagement, loyalty and checkouts as bottom lines become more vulnerable to economic conditions.

But because there is no single tool that helps consumers track, access and redeem these scattered balances, they often go unused—leaving real purchasing power on the table.

That’s a major problem.

Stored value is constantly left dormant

Of the 17 loyalty programs they belong to, the average person is only active in about nine. Of those active memberships, one in ten points earned is left to expire. Millions of rewards go unclaimed.

The next phase of fintech innovation will ensure this idle capital is seamlessly incorporated into everyday spending streams. The financial infrastructure that will make it happen is an evolved digital wallet.

Today, stored value is often absent from digital wallet balances—held hostage as “trapped cash” in silos like inboxes, apps and junk drawers. But fintech can solve that problem by adding a layer of functionality to digital wallets that creates a single connected repository.

It’s time to consolidate for everyone’s sake.

Household budgeting depends on stored value

Economic pressure has made people habitually strategic with what, when, where and how they shop year-round. In addition to employing all kinds of deal seeking and stacking techniques to save, consumers are also using stored value as liquidity to pay for things they need and want.

Loyalty points can offset grocery prices. Fuel rewards can cover gas. A promotional balance can lessen the blow of a major household purchase. At BHN, we see gift cards functioning as both gifting instruments and personal budgeting tools—a way for consumers to set spending boundaries before they reach checkout. Our data shows that in the last year, 60 percent of consumers have used gift cards for non-gifting purposes and are buying them for their everyday utility. In fact, our latest study found nearly one in five consumers use gift cards only for themselves.

But while these creative patterns are becoming routine, keeping track of aggregated spending power is still highly inefficient and fraught with hassle. Those barriers can be removed using evolved digital wallet technology.

Digital wallets can enable comprehensive embedded commerce

Consumers don’t want to open multiple apps to see whether they have points or a gift card. They don’t want to lose an email that gives them store credit. They don’t want to forget about a refund. And they certainly don’t want to let hard-earned rewards expire.

Merchants and businesses don’t want these situations either. Unspent stored value represents a money pit that doesn’t yield the ROI or results it is intended to create.

To enable truly embedded payments that benefit everyone, all available value must be visible before a purchase happens. This means having maximum spending power within reach and usable across social platforms, retail apps, digital marketplaces and brick and mortars.

Digital wallets of the future will make this possible and serve as more than just containers for payment credentials, passes and tickets (a solid foundation, but only the beginning). They will bring traditional payment methods, rewards, points, refunds, incentives and branded cards into a single visible balance people can use to pay wherever they’re shopping.

Having a clear line of sight thanks to a super-charged digital wallet will influence people’s ability to spend—and also where, when and with which business.

Better wallets equate to better ongoing engagement

The purpose of stored value is to drive long-term engagement that leads to sales, loyalty and trust.

Easy-to-access stored value is highly effective in accomplishing these goals, and in driving upspend since consumers perceive these funds as found money that lowers the barrier to purchase. As a result, they often spend beyond the original value.

For example, BHN’s research found that on average, nearly 60 percent of consumers would spend more than the value of a gift card and that figure is rising each year. A retailer-issued refund for store credit keeps the customer shopping with that brand. A reward earned after a purchase can prompt another visit. A promotional balance can move someone from interest to action. An appeasement issued in real time restores confidence.

Integrating stored value into a single convenient balance within a next-gen digital wallet creates a powerful flywheel that keeps customers in merchants’ own ecosystems in a number of different ways.

This next layer of financial infrastructure has even more potential when AI is used to keep that cycle continuous and shape decisions.

Read More on Fintech : Global Fintech Interview with Rob Young, Managing Director – UK at InDebted

AI can surface stored value at the right moment

While digital wallet infrastructure can consolidate stored value and make access for spending simple, AI takes efficiency one step further by organizing stored value information so it impacts buying decisions. AI can integrate with digital wallets to surface available balances, remind users of expiring promotions or points, or suggest when stored value can be stacked for more savings.

These nudges encourage action and help businesses continually show value while keeping the pathways to checkout clear. It can also support discovery and customer acquisition as people use AI to find deals, compare prices and maximize their budgets. An AI-surfaced offer or promotion that can be seamlessly added to a digital wallet provides businesses with a powerful way to introduce themselves and stay connected to customers after they pay.

AI applications help in-wallet stored value serve as an “always on” marketing tool that keeps the flywheel spinning, keeps customers spending within business’ own ecosystems and helps increase customer lifetime value.

Digital wallet infrastructure is primed for innovation

Stored value, digital wallets and AI are converging around a consumer-driven need for more seamless payments. People don’t necessarily need new types of payment tools. More immediately, they need to be able to use the value they already have more effectively.

Available financial technology offers a creative way to unlock a new layer of spending power within the digital wallets people have already adopted.

By evolving how digital wallets fundamentally operate, fragmented balances become connected spending engines. As a result, consumers can maximize their spending power, make purchases more confidently and experience truly embedded commerce. This also means businesses get better ROI for their marketing efforts, create more touchpoint opportunities and encourage higher spend.

With stored value comprehensively layered into digital wallets, dormant capital becomes active purchasing power—and the businesses that build this infrastructure first will define what seamless commerce looks like next.

About Blackhawk Network (BHN)

Blackhawk Network (BHN) is a leading global financial technology company that specializes in branded payments, prepaid gift cards, and payment solutions.