Seven ways to use card-on-file to reach top of digital wallet

Ecommerce sales are projected to grow from $4.2 trillion worldwide in 2020 to $5.4 trillion in 2022, according to Statistica. And in North America, card-not-present transactions (excluding travel) have grown as much as 30 percent, according to Visa’s Q2 2021 earnings report. These shifts and ecommerce growth trends are creating a need for businesses and financial institutions to think digital.

Card-on-file (COF) adoption or, storing your payment credentials with a merchant to easily process future transactions, is an essential way to benefit from this rapid growth and succeed in a digital-first world.

But how do issuers ensure their card is the one their customers will choose first in implementing COF? Reaching this top of “digital” wallet status requires the issuer to take actionable steps to influence that decision, one that benefits the consumers with efficiency (no need to enter card credentials every time they want to make a purchase), ease (automates monthly bill pay and helps avoid late fees), and convenience (eliminates need to carry a physical card).

Becoming a COF influencer

There are three key areas where consumers can use COF: online shopping (storing the payment credentials on a merchant website or app like; subscription services and bill payments (automatic scheduled payments for subscription services like Netflix, or utilities or phone bills); and digital and virtual wallets (such as Apple Pay, Microsoft Store or PayPal).

Financial institutions looking to enhance the COF experience for consumers and drive COF activation can achieve all three in the following ways:

Engage and educate early:

  1. Take advantage of the first 90 days after a card has been issued to a cardholder and educate them on the convenience of storing the COF. A cardholder’s overall engagement has been shown to increase after activating COF: 1.5x increase in number of total card transactions over the six months after the first COF transaction, according to a VisaNet Analysis in 2019.

  2. Use email and mobile notifications to ensure your early-month-on-book programs have a strong emphasis on COF activation. Research from VisaNet Analysis in 2020 has shown that consumers who do not adopt COF actively in the first six months don’t tend to be top of wallet or highly engaged with the card over the long-term.

  3. Many issuers drive this behavior by using tiered offers (e.g., store your card at three merchants and get $10 in rewards).

Measure, monitor and win-back:

  1. Proactive retention management is also a key factor to ensure top-of-digital-wallet status. Many digital-savvy customers are quick to flock to the best value or reward. Discount and additional point offers may motivate many of them to change their mobile pay COF.

  2. Tenured cardholders tend to be more passive than digital-savvy ones. Recent Visa research17 explored incentives that could drive behavior and showed that a $5 incentive is optimal to motivate customers to use their debit card.

For issuers, COF drives card primacy and can impact the overall volume on the card. Ultimately, consumers win too with the added convenience, security, and speed of COF.

This abridged article was reprinted with permission and first appeared in Visa's Navigation blog.