Unlocking Hidden Data Treasures Through Payment Stream Analysis

Everything is in flux, especially in digital business. The next provider, the next contact, is only a tap away. Trust is a valuable but also fragile commodity. Winning customers and building lasting relationships with them is a genuine challenge for many companies in the digital age. How do you get to know customers better without ever meeting them? How do you correctly assess their needs, wants, and current life situation? Without personal interaction, the touchpoints needed to make the right offer at the right time seem to be missing.

The new perspective: where personal contact is missing, data can help Digitalization is changing not just how companies interact with customers, but also opening up a new path to understanding them. That path runs through customer data — particularly payment data. Because almost nothing reveals more about a person than their economic footprint. Every single transaction tells a story, one that can be traced and built upon. Someone making a down payment on a car often needs auto insurance. Someone booking a trip might need travel cancellation insurance. And someone buying a full set of baby essentials is likely facing a whole range of needs they hadn't previously anticipated. Analyzing and evaluating payment activity in a targeted way makes it possible to develop new approaches to value-added services and interactions — and even to build entirely new business models on top of it. Banks and financial service providers stand to benefit most, but insurers, energy providers, and other service companies can too. Since PSD2, third-party providers have also been allowed to access bank customers' account data — provided the customer consents. And contrary to what many might expect, that's more often the rule than the exception: even in data-sensitive Germany, around two-thirds of customers already agree to their data being used when it brings them noticeable benefits.

Payment service providers sit at a critical crossroads of data flows Payment service providers sit at a central point in these data flows. By handling electronic payment transactions at the point of sale (POS), they often have access to two data streams at once. Used intelligently, this payment transaction data — generated at physical or virtual points of purchase — delivers valuable insights on both the consumer and the merchant side. The potential of payment stream analysis is therefore enormous. Billions of transactions are generated every single day, data that can be used to better understand consumer needs, anticipate future demand, or develop value-added services for merchants. The prerequisite, however, is that this data can actually be made usable.

What matters most: the right algorithm for data analysis The key factor behind successful payment stream analysis is artificial intelligence (AI). Only AI-based, self-learning algorithms can process the sheer volume of data quickly enough to spot the relevant patterns and truly turn data into knowledge. To predict customer purchasing preferences, for example, payment streams are evaluated against defined parameters and categorized based on the counterparty account and purpose of payment. Spending at discount grocers or organic supermarkets is identified in the same way as spending on sports, travel, or education, and these categories are then intelligently linked together to draw conclusions about future behavior.

What's essential for a true 360-degree view of the customer is including all available transaction data sources. While most analyses only look at payment activity from debit card systems, Acceleraid enables its clients to combine debit card network data with credit card usage data and analyze them together. The same applies to payments made via smartphone, since the actual payment runs through a virtual card stored in the digital wallet and is therefore effectively a standard card payment. Integrating credit card data is especially important because it's increasingly used for online purchases above 100 euros, while debit cards remain the preferred cashless payment method at the physical point of sale. Only by combining both transaction streams can you draw truly reliable conclusions about a customer's current life situation — and, in turn, deliver better customer engagement, more precisely tailored offers, and additional prompts for interaction.