Turns out you don't have to be a banker or a mathlete to get into the credit card business.
Barclaycard US is calling its new Ring card "the first social credit card to be designed and built through the power of community crowdsourcing." That means you. The secret of the card, physically similar to any other, is the financial system behind it: The crowdsourced design has low interest rates, low fees, simple terms and "the opportunity for cardholders to shape and share in the product's financial success." That sounds unlike any other credit card we've ever heard of.
Using a typical credit card is like owning a modern car that conceals nearly every engine part beneath a thick plastic cover under the hood. You drive your car around and fill it up—it's a very useful, go-anywhere tool—but you absolutely don't get to see any of the working parts. They're almost exlusively controlled by Mercedes or whomever designed the car and engine. Cards are the same, as you can carry around the plastic, use it to buy things, pay off the monthly bill and even—after a few customer helpline calls—tweak how it suits you, but basically the entire process of how the card works and how much it costs you and how it makes profits for the company is a mystery.
And that's what Ring is all about changing, probably as an experiment for Barclaycard itself. The company notes that "for the first time, through a virtual cardmember community, cardholders will have visibility into the card's financial profit and loss statements. An online framework will provide cardholders with the ability to influence decisions that impace how the card is managed and serviced," and this all by itself is a radical re-think of the normally impenetrable process.
All the crowdsourcing happens in a special forum, which Barclaycard itself is actively participating in, so that user questions, problems, and suggestions may have more immediate exposure to decision makers in Barclaycard. It seems a little like a community bank, or a collective credit agency, but in this case those using the product actually influence how the product works.
Barclaycard's Paul Wilmore, Managing Director-Consumer Markets, Barclaycard US, confirmed to Fast Company that these sorts of modern collective financial bodies were an inspiration: "We were inspired by the sense of community shared among credit union members, as well as the way social media is helping people learn from each other. Our online community allows for these two ideas to converge. Just like real-life circles of friends and communities of like-minded people, we’re building an online community that enables our cardmembers to gather information, share knowledge, and have a role in the card’s future success."
Wilmore added the firm is "motivated by a desire to change the way people think about credit cards and their credit card company by putting the power back in the hands of customers." For an institution that typically seems to think fairly conservatively about its products, that's an innovative stance to take. Wilmore continued, "If the initial response we’ve received from the Barclaycard Ring alpha testing is any indication of what’s to come, I think we may be onto something! We’re excited about where we go from here and proud about the fact that our cardholders will really play a lead role in that evolution."
That's actually a hint at what this move is all about, in the end. Barclaycard has become aware that radical change is afoot in the payments space, driven partly by the mobile pay revolution but also affected by maneuvers made by companies like PayPal. If Barclaycard is to retain its customer base, it may be a smart move to adapt to the new normals, rather than resist, and a crowdsourced credit card that would seem to be more on the user's terms than the bank's alone seems like a great start. When mobile payments are more standard, it's also possible systems like Ring will play a significant role in a much more dynamic market, where users can decide how to pay for something more or less at whim, and probably often right at the checkout. Ring's adjustable terms could also be a hint that the way you pay for things in the near future may indeed feel very different too.
Update: Barclaycard's Paul Wilmore has been in touch to explain a key feature of Ring that seems to add still more value than its open-forum nature—it may even be its masterstroke. It's called Giveback, and it means users can actually make money, "share in the revenue that's generated as a result of their collective decisions" as the card firm puts it. It's all about promoting active user involvement in adjustments and refinements to Ring's ongoing financial design.
Cardholders will see how the portfolio is performing through an online profit and loss statement. The community manger will facilitate dialogue among the members about how the Giveback is shared by the community is maximized. At the start, the cardholder Giveback will be driven by someone’s engagement with the product – and usage – and their involvement in helping us build the community.. A community member’s engagement – through forums and postings — will directly impact their status within the community. The community will work together to maximize the program. I don’t foresee the community allowing greater Giveback just for posting. We have aligned interests of the various entities – community members and the issuer. This will result in a rewarding and transparent way to share the Giveback.
In other words, Barclaycard is adding a small amount of gamification: If you actively participate to improve the Ring experience and performance, then you'll be rewarded—using mechanisms that the community itself can adjust. That's brilliant, as it could mean the users themselves are working to refine Barclaycard's own design, for their own gain as well as Barclaycard's.
[Image: Flickr user dannohung ]