With consumers changing their purchase behaviours and businesses modernising their VAS offerings, are vouchers still relevant, or is this an outdated product?
The various use cases associated with voucher issuing and redemption offer a broad range of opportunities to drive your digital strategy. Most importantly, the scope exists to innovate with new offerings, improve customer experience and retention, and provide financial services access to unbanked consumers.
Although demand for digital vouchers does not outperform that of VAS products such as Prepaid Airtime and Electricity, Electrum’s latest research for the 2022 Digital Goods and Services Report indicates that 38% of consumers expect to be spending more on vouchers in the future. It is also worth noting that the survey respondents stated that the most popular channel for purchasing vouchers is banking apps, followed closely by retailer till points - providing opportunities for both banks and retailers to build on this popularity.
When it comes to in-store purchases, vouchers allow consumers to quickly and simply convert their cash into a digital payment method that can be used immediately. This is a big draw for the unbanked or for individuals who do not have immediate access to online banking but are looking to make a cashless transaction. For consumers who do have access to online or mobile banking services, it is secure, easy, and convenient to digitally purchase and send vouchers.
When purchased, a voucher code is generated and this is used for redemption across a large number of services or participating stores - by the individual who purchased the voucher or by a recipient who can be sent the code digitally.
Vouchers were initially seen as a way for consumers to safely and easily fund specific purchases. However, a growing trend has emerged that allows consumers to buy single digital vouchers which can be redeemed at a multitude of retailers for different types of purchases - Flash’s 1Voucher and BluVoucher are examples of this service.
The growing functionality of apps combined with the digitisation movement means that vouchers can offer consumers so much more than the initial, limited applications envisioned.
Discovery Bank is one example of innovation as they introduced the option of prepaid healthcare vouchers in South Africa during the COVID-19 pandemic. They were soon followed by the retail industry with MrPrice and Shoprite adding NetcarePlus to their VAS offering. These vouchers open up affordable access to private healthcare for South Africans without medical aids and can be purchased via WhatsApp, online, or in-store. Real-world uses range from parents buying healthcare vouchers for their children studying out of town, to employers who do not offer medical aid benefits but want an alternative option to give their employees some access to private healthcare.
Grocery vouchers became an important form of social aid that was highlighted during the pandemic - particularly during times of lockdowns and restrictions. The use of digital channels to purchase and send grocery vouchers enabled consumers to support friends, family, and employees by sending them vouchers for essential groceries via SMS or WhatsApp which could be redeemed immediately and easily at the specified retailer.
With many South Africans moving away from home in order to work, the importance of having a fast, affordable, and trusted way to send money back to their family in the form of vouchers cannot be underestimated.
Entertainment vouchers, such as for Netflix or Spotify, have rapidly grown in popularity as more consumers are embracing streaming services as their primary form of entertainment. One South African bank reported that consumer spending on streaming services increased by 70% from 2019 to June 2022. One reason for this increase can be attributed to expensive DStv subscriptions leading to consumers finding alternative and more affordable services.
Vouchers provide a growing opportunity to leverage existing loyalty programmes and improve customer retention. FNB partners with major retailers allowing the bank to offer digital vouchers that can be purchased on their bank app using eBucks or Rands. The bank further promotes their eBucks loyalty programme by offering customers discounts when vouchers are purchased using eBucks.
Customer behaviour can be incentivised using vouchers. An example is when a customer performs a desired activity - a certain spend with a retailer, or savings at a bank - and the customer is then issued a reward. This reward takes the form of a chosen voucher that can be redeemed in-store or online.
Linking vouchers to loyalty or reward programmes is a way to expand customer offerings, while at the same time incentivising the individual to spend or save more with your business or chosen partners. Encouraging customers to use their loyalty points to purchase vouchers means that their spend remains within your business ecosystem and adds to your profit margins.
With the wide range of voucher types and implementations comes a growing number of different voucher providers. Consumers are coming to expect a comprehensive voucher offering from leading businesses. The ability to integrate with as many providers as possible is an important factor in the success of your voucher service. A single provider will often give you access to a number of different voucher types such as gaming, streaming, and betting. This means the potential of an exponential rise in your consumer offering with each new provider integrated. Electrum’s existing Voucher integrations can give you access to various different types of vouchers so that you can serve multiple needs for one customer.
Your value-added services solution needs to be flexible and agile in order to quickly add and onboard new providers efficiently. A Digital Goods and Services Platform, such as Electrum’s, makes adding new providers fast and affordable, allowing your business to rapidly cater to new opportunities from tried-and-trusted offerings. Electrum’s Platform also connects your business to multiple aggregators so that you can negotiate improved commercial agreements and save on direct integrations.
Vouchers remain an exciting opportunity for both banks and retailers as a way to expand your product offering and revenue and to offer your customers more convenient ways to transact. With the expanding use cases, we can see voucher popularity and relevance continuing to grow in the future.
We would love to talk to you to explore how to build or boost your voucher offering. Pop us an email to make contact or follow us on LinkedIn for more insights.