In April, FNB’s eBucks rewards programme launched a benefit for qualifying customers who would receive a complimentary weekly coffee, cappuccino, or hot beverage at Starbucks stores. In the nearly five months since, tens of thousands of free coffees have been redeemed.
This benefit would be available to those who had changed their transaction behaviour.
Simply, a customer must do at least five payments using their FNB Virtual Card, FNB Pay (in the FNB app) or with a partner wallet every week (partner wallets include Apple Pay, Samsung Pay, Garmin Pay and Fitbit Pay). They also need to be on rewards level two or upwards.
But why is a bank giving away a free coffee each week?
In a typical month, the value of the four coffees totals as much as R148.
Key to the benefit is the incentive for an account holder to use FNB Pay (or one of the partner wallets). Because FNB Pay and the partner wallets are built on the bank’s virtual card rails, these are significantly more secure than using a physical card.
The bank says one of the “key security features on its virtual card is a dynamic card verification value (CVV) security number that changes every hour to help customers minimise the risk of fraud”. These dynamic CVVs work seamlessly once the card is loaded into a partner wallet, such as Apple Pay.
The South African Bank Risk Information Centre (Sabric) says gross credit card fraud for locally-issued cards totalled R469 million in 2020. Of this, R168 million worth of transactions took place in the country (the rest were offshore, mostly on online platforms).
By far the largest type of fraud is so-called ‘card not present’ fraud.
This comprised 80% of total gross fraud loss in the year. Exclude the impact of the Covid-19 lockdown in 2020 and these gross fraud values are typically around 30% higher.
Johan Moolman, CEO of eBucks Rewards, tells Moneyweb that “card management costs the bank quite a lot of money on an annual basis”. He adds that the virtual card lifecycle and costs associated with that lifecycle are greatly reduced. Along with this, fraud is greatly reduced. Plus, it offers the account holder a “great payment experience”. There is “significant benefit for us over the long term”.
Yashen Singh, CEO of Premium Core Banking at FNB, says the group’s “entire strategy [is] to help customers get onto digital platforms and stay there”. These are “fundamentally more secure”.
The deal with Starbucks
From a merchant perspective, this kind of offer is only possible if FNB is the acquiring bank at each store. In other words, it signed a deal with the licensee of Starbucks in South Africa to ensure its payment terminals are in each outlet.
It is able to use a portion of the interchange fees charged to the merchant (in this case Starbucks) to cover the cost of the coffees.
One can be sure it is also not paying for these redeemed coffees at the retail price of R37!
Along with qualifying eBucks rewards members, FNB has also extended the benefit to its younger customers who hold FNBy Next accounts (for those aged 18 to 24).
Starbucks currently doesn’t have the largest footprint in South Africa (just more than 60 outlets), and stores are clustered in Gauteng, Durban and the Western Cape (mostly Cape Town and surrounds). FNB says there is more to come on this front.
It has used a similar model – focused on driving the use of the virtual card and partner wallets – to give eBucks customers an additional R2 per litre back on fuel regardless of eBucks reward level until the end of September.
To qualify, customers have to pay with their FNB or RMB Private Bank virtual cards or through partner wallets such as Apple Pay, Samsung Pay and Garmin Pay when paying for their fuel at Engen.
They also need to do at least one online additional virtual card transaction per month at any merchant and ensure their vehicle is loaded on nav» car on the FNB App.