Monetizing Payments Data Responsibly Pays Off

Originally published in Financial IT

If you are opening a small kiosk near a university campus in the Netherlands’ biggest student city of Utrecht, make sure you stock more premium coffee than cheap coffee.

At least that’s what the point-of-sale transaction data* shows. We’ve all seen the news articles poking fun at broke millennials for spending too much on artisanal products and avocado toast, so it’s not a groundbreaking insight that they also like splurging on fancy coffee. But it’s only now with the advent of connected devices that trends can be quantified accurately and in real time.

Payments have become a seamless part of the customer experience, able to be now completed with a tap, a wave or a click. Despite their invisibility, payments data can yield rich insights about economic trends.

Building an ecosystem of insights
Traditional methods of understanding consumer preferences are no longer effective on their own. For instance, surveys are limited, inefficient and biased. Transaction data can provide far more granular insights to various stakeholders – from retailers and restaurants to corporations and investors. Institutional investors and economists are already using this data to make better decisions. 

This means companies, from retailers to payments firms, can create a new revenue stream by monetizing their data. Even when this data is anonymized, many are still concerned about unintentionally exposing the identities of their customers. However, the key is in aggregating the data in a way that doesn’t include sensitive information about any individual source. 

Aggregate data, stripped of identifying details, can still be a powerful source of insights. For example, we track data on beverage sales in on-trade channels (the industry term for restaurants, bars and cafes) across six countries in Europe. This data can be used in all sorts of ways. A business can use it to help price products competitively without having to physically visit all the other bars in the city. An international food and beverage (F&B) operator can use this information to decide on the best location for its new outlet. Meanwhile, the payments solution provider collecting this data can tap into it to serve merchant partners’ needs. This means the same data can have a meaningful impact across different organizations and across the whole value chain.

Our mission is to democratize access to this underutilized data so that someday, even a consumer can use this data to find out where the cheapest gin and tonic cocktails are in their city!

Bringing outside insights into the boardroom

Sometimes analyzing your own business data simply isn’t enough to provide the full picture.

According to research**, the rate at which companies are using external data sources is outpacing that of internal sources. In a more connected and complex world, organizations are starting to realize that their internal data is just one piece of the puzzle.

For instance, many companies may already have a good grasp of what they sold last week, last month, or last year. But this may not be sufficient to predict what will sell tomorrow. The most accurate predictors often come from external sources – forward-looking market trends, competitive intelligence and insights that provide greater understanding of the environment in which the business operates. For example, by looking at historical sales of premium alcohol in our dataset, one can make inferences about growing affluence or gentrification in certain neighborhoods. Now, imagine being able to get a sense of that in real time!

The problem is most merchants don’t have the capability to easily crunch through all this information. This creates an opportunity for their payments partners to help connect the dots. They can use this data in a strategic way to create new products or expose the data in a way that delivers value to merchants.

Merchants shouldn’t have to think about data, after all, and be distracted from their core business. What matters for them is getting actionable insights. For instance, insights on anonymous customers’ full wallet spend and basket composition can help merchants optimize their operations or improve the end-customer experience. 

Knowing what your customers purchase in your store or restaurant is one thing – but being able to access aggregate industry data is even more powerful. If we see that nachos and beer in the same transaction lead to an average 30% higher consumption in beer, then we can advise merchants trying to increase beer sales to include nachos on the menu. 

Getting data monetization right

As all the examples above show, a robust data monetization strategy is important for innovation, growth and a competitive edge. But many companies are also wary of the challenges of extracting value from such vast amounts of data.

This is why it’s important for them to find partners that can help them establish a strong and safe data foundation in order to build the business case and technical platform needed to effectively monetize data. This requires close collaboration and a unified approach that can turn their data into both revenue and insights.

*Coffee sales in Utrecht from October 2017 – September 2018

**Business Application Research Center, March 2018

In 2020, Every Day is Data Privacy Day

California rang in the new year with not just fireworks but a sweeping data privacy law. Not long after, Google made a monumental change to its browser, killing cookies that stealthily vacuum up our data. Is data privacy going to be flexing its muscle in 2020?

Some are already asking if this is going to be the year the US introduces its answer to Europe’s GDPR, a sweeping set of rules designed to protect consumer privacy. If so, this would usher in a new regulatory age and set a different digital tone for the coming decade.

As we look back at the evolution of privacy over the last decade, what is clear is that data protection needs to evolve with the times. The introduction of GDPR in 2018 was important but its impact can be debated. Yes, it has done a lot of good, especially in creating greater public awareness around the issue. It has forced companies to become more transparent and accountable over their handling of user data.

But what has that greater awareness and transparency led to?   

For one thing, we learnt that “informed consent” doesn’t mean much in an age of information overload. One study estimates that reading all the terms and conditions in the privacy policies you’re shown would consume 244 hours per year. 

Many firms have pledged to do better but such verbal commitments can be compared to New Year’s resolutions. While they may be guided by well-meaning intentions, it is much easier to eat a plate of cookies than a plate of vegetables, especially if they are third-party cookies…

So what is the future of data privacy in 2020, and beyond?

Well, we will make one bold prediction: Targeted advertising is on its way out. It might not happen this year, but it is surely dying a slow death.

After all, stopping microtargeting would solve many of the problems that have dominated the public conversation over the last few years: fake news, political manipulation, data mining practices, surveillance capitalism, etc. 

While Google will no longer allow microtargeting on political ads and Twitter has banned political ads completely on its platform, we’re asking: Why stop at political advertising? 

Currently, US regulators are being pushed to study ads that target children and investigate practices for collecting online data about them. Up until just recently, advertisers on Instagram could target teenage girls under the age of 18 to promote dubious weight loss products. Even Microsoft founder Bill Gates has said that societal issues have demonstrated an increasing need to ban this type of microtargeting.

It has never been more urgent for us to get rid of this toxic practice. Insidious forces are now employing the same ad targeting that has been used by brands to grow their customer base and sell products. Except now, the stakes are a lot higher because it’s not just about persuading someone to buy a pair of jeans. It is being used to erode democracy and polarize society, one optimized click at a time. 

Ignore all the panaceas that will inevitably be brought up – more safeguards that can be imposed, more people hired to moderate content, etc. These will only be stopgap solutions that treat the symptom rather than the root of the cause. 

For the tech giants controlling these platforms, it’s naturally not in their interest to put their biggest source of revenue at risk. As for regulation, it will always be a slow and incremental process – GDPR had been heatedly discussed by lawmakers for years before it finally came into effect. And there are still gaps and loopholes in GDPR being exploited. 

As such, brands themselves should be proactive and channel their energy into initiatives that are less privacy-intrusive. The ad tech industry is already acknowledging the writing on the wall. In fact, Gartner forecast that 80% of marketers will abandon personalization efforts by 2025 due to lack of ROI, the perils of customer data management or both.

Of course, no one likes to be the first to take a moral stance that may not be good for business. The industry lament seems to be: “If I’m not doing targeted ads and my competitors are, then I’m losing out.” Yet it’s unclear how effective personalized ads really are. When The New York Times scrapped behavioral targeting in Europe, a move prompted by GDPR, its digital ad revenue continued to grow. Instead, it focused on contextual and geographical targeting. That’s a way of serving relevant ads without being creepy or intrusive.

As a company in the emerging alternative data industry, we help our partners monetize data with strictly zero personal information – which is why we know it’s possible. We’re also in the business of uncovering the hidden value in data others might overlook or ignore. 

While data protection has long been a matter of concern confined to a specific group of stakeholders within a company, like IT, it is now a critical issue that impacts nearly every level of an enterprise – from the marketing department to the CEO.

This is why we call upon all organizations to not just put privacy first, but to truly embed it at the heart of their business. Embracing privacy doesn’t mean having less data to work with. Through compliance, collaboration and creative technology, firms can explore new ways of harnessing non-personal data to unlock value for themselves and their customers. And that’s the ultimate win-win scenario.


The History of Big Data: From BC to AD

Big data may be the big buzzword of our time, but the concept goes back hundreds of years.

By definition, big data refers to any data sets that are too large or complex to be easily dealt with. In the 1600s, John Graunt, the father of modern demography, also worked with huge, overwhelming amounts of data about the population of London. 

But it all starts with data collection, and we know this began millennia earlier with the practice of census-taking. 

Hunting and gathering (of data)

A census is basically a way of gathering information on a population, and it’s not restricted to people. The earliest known census was conducted in Babylon in about 3800BC. Records suggest that the census counted the numbers of people and livestock, along with quantities of butter, milk, honey and vegetables.

These numbers were recorded on clay tablets although unfortunately, none of the raw data has been preserved. The Daily Telegraph muses that it could be because “the Babylonians probably sent the tablets through the equivalent of clay shredders to make sure their privacy was protected!”

The Bible also relates several accounts involving censuses, the most well known being the birth of Jesus in Bethlehem where Mary and Joseph had gone for a Roman census. 

Censuses were used by the ancient Romans solely for the purpose of determining taxes. A shame they didn’t do more with the data – because maybe they could have used it to predict the eventual downfall of the Roman Empire! 

Data of the dead

In the early 1600s, a London hatmaker named John Graunt tapped into overlooked data sources to produce remarkable insights about life, health and mortality in his city. 

He started studying death records that had been kept by London parishes and compiled fifty years of data into his book, Natural and Political Observations Made Upon the Bills of Mortality. This is also the first known table of public health data, and its timely arrival coincided with the waves of bubonic plague that were sweeping the region.

His report painted a vivid picture of how Londoners lived and died, and he was the first person to give an estimate of the city’s population. He even predicted the percentage of people who would live to each successive age and their life expectancy year by year. But the data he collected was not always thorough or accurate – for instance, Graunt observed that syphilis was often covered up as the cause of death. 

All these records were publicly available but before Graunt, no one had thought about aggregating and analyzing the information in this way. His work helped to surface valuable insights that would have been instrumental for the city in mapping disease outbreaks and making better decisions. 

AD: The rise and rise of alternative data

Fast forward to present day, when the world is practically drowning in data. Yet we are meaningfully using only a fraction of it.

Businesses, investors and research firms are mostly guided by traditional data – that is, the usual government or company-issued data such as earnings and economic reports. But the frequency and depth of such data are often insufficient for identifying opportunities and emerging trends. That’s why more are turning to data outside the traditional realm, that is ‘alternative data’. 

It’s growing fast, with the number of alternative data providers tripling in the last three years alone. But the concept itself isn’t really new. 

There’s an oft-told tale about Walmart founder Sam Walton who would count cars in parking lots as a barometer of business, and once was so absorbed in the task that he crashed his car into the back of a Walmart truck. Now this can be done more easily and at scale with satellite imagery. But the moral of the story is that patience isn’t necessarily a virtue when it comes to business or investing – after all, why wait for the quarterly sales report when you can monitor foot traffic or point-of-sale purchases in real time? 

At its essence, alternative data is any data that is under the radar and underutilized. This data doesn’t need to be exotic or complicated. You could say that over 300 years ago, Graunt was also tapping into alternative data by examining mortality records.

While Graunt had to crunch through all this data manually, we now have the ability to process vast amounts of complex information pretty quickly. That enables businesses and investors to glean insights faster so that they can act on them before their competitors do. 

But there is one issue Graunt would have run into today…

What syphilis can tell us about privacy

As Graunt had astutely observed that syphilis deaths were likely under-reported due to social stigma, people suffering from the venereal disease in that era probably wouldn’t have been thrilled about such information being exposed. 

We live in a pro-privacy world now, where high-profile scandals have made consumers increasingly distrustful of companies handling personal data. Ensuring data privacy and security should rightly be a top concern for every company. 

It is for this reason that a clear and hard distinction must be made between personal data and non-personal data. While it is legally and morally wrong to expose an individual suffering from syphilis, there’s a huge public benefit in tracking and aggregating anonymized cases. In the US, the Centers for Disease Control and Prevention (CDC) emphasizes the importance of national syphilis surveillance to understand how it spreads so it knows how to focus prevention efforts.

While most companies may not be dealing with matters of public health, it’s imperative that they handle their customers’ data with just as much sensitivity. Suburbia offers point-of-sale transaction data but we make sure our data sets are stripped of all personal details to begin with. This means we take it one step further than simply anonymizing the data – it’s not just about masking John Doe’s identity, but leaving any demographic information out completely.

The future of data

More businesses will find ways of harnessing the treasure trove of underutilized insights hidden in plain sight all around us. The Internet of Things means that the variety of data available to us will grow exponentially. 

In turn, this data will become more accessible as our ability to harvest usable information from big data improves by leaps and bounds with advancements in AI and machine learning.

At the same time, the growing privacy movement will shake up the advertising practices and business model of many companies. But with constraints comes creativity and new inputs for decision-making.

This will drive more companies to embrace and leverage alternative data. If investors are able to use it to generate higher stock returns, why can’t companies use it to improve their operations and grow their business? 

Ultimately, alternative data won’t be so ‘alternative’ in the future, as data becomes the next frontier for competition. Those who are able to tap into new sources to generate insights will be the victors in this brave new world awash with data – and those who fail will end up victims of their own complacency, much like the ancient Romans.

Lemon Lime and Data: How Sprite Has the Secret to Data Security

It’s cold, it’s refreshing and it pairs well with spicy food, but what can Sprite teach the world’s biggest tech companies?

In the raging debate about companies’ use of personal data for profit, people often think there are only two choices: Hand over all your personal data, or stop using online services like Facebook or Google Maps completely.

But this puts the burden of responsibility on consumers, who may not have the resources or information available to make the right decision. Instead, companies handling personal data should take proactive steps for better, safer products. And they only have to look to the soda industry for inspiration.

For decades, soda titans like Coca-Cola and Pepsi enjoyed uninterrupted growth, building global beverage empires and becoming household names. While there were always concerns linking soda to health problems, they didn’t start hitting the mainstream consciousness until the end of the 20th century. By then, soft drinks makers were often fingered as the sole culprits for rising obesity rates.

Today, dozens of countries around the world, including the UK, France and Norway, have slapped a tax on sugary drinks. While the tax has not yet been introduced in the Netherlands, Coca-Cola took an unprecedented step there to stay ahead of regulations.  

Coca-Cola’s game-changing decision

In 2017, the company pulled normal Sprite from the market, replacing it with the no-sugar Sprite Zero. This means when you order a Sprite in Holland, you will be served the sugar and calorie-free version by default. It has become the “regular” Sprite.


Coca-Cola said Sprite had been performing well, so it wasn’t just another move to boost sales. Instead, the beverage giant was making an important step to future-proof its business and provide a healthier product, without forcing customers to choose. Although they eliminated the bad choices, they were still able to offer variety to consumers, with new flavors like lemon lime and cucumber. 

So what if we take the same step for data? 


While businesses handling our personal data assure us that our privacy matters to them, the news headlines tell a radically different story. How can consumers trust companies when there are high-profile data breaches and incidents of companies misusing our data on a regular basis?

Most firms handling personal data are unlikely to make a change unless they feel the noose of legislation tightening. But as we’ve seen before, legislation is not a magic bullet. Consider Europe after new data and privacy protections (grouped under GDPR) went into effect in 2018. According to the International Association of Privacy Professionals, almost 100,000 privacy complaints have been filed but only a few have led to meaningful penalties.

In the case of soft drinks, Dutch experts have questioned whether a sugar tax would even make a serious dent in consumption unless the tax was a substantial one. 

Even when there are stricter rules in place, they can still fail to change consumer behavior or address the loopholes that allow companies to conduct business as usual. The ubiquity of those consent forms on websites have only encouraged people to adopt a click-and-ignore mentality, so that they can just make the pesky pop-up disappear as quickly as possible.

When it comes to data privacy, there are those who argue that people can actively choose not to use the services of companies that exploit their data. Well, maybe they shouldn’t have to make that choice themselves. 

Facebook Zero 

Just like how Coca-Cola offers only the zero-sugar Sprite in the Netherlands, zero personal data could also be the norm. Companies may need to collect some user data in the course of doing business but there should be limits as to how much information they can amass on an individual. Why does a social network even need to know your gender, in the first place?

It has become untenable for firms to say they value consumer privacy while collecting and hoarding user data, putting it at greater risk of breach or misuse. The same way it was impossible for soft drinks makers to say they care about their customers’ health while shilling beverages loaded with sugar.

More importantly, instead of trying to defend their key sales driver, the soda companies innovated and looked for new opportunities. They reformulated, they introduced smaller packages and they made it easier for consumers to embrace a healthier lifestyle. As a result, Coca-Cola’s revenues have stayed sweet even if their drinks haven’t.

Finally, what could be the most interesting parallel between sodas and personal data monetization is their innocuous beginnings. 

The first fizzy drinks were marketed as health drinks. If you were ordering a Sprite occasionally to wash down your meal, then soft drinks weren’t going to send you to an early grave. But over the years, with growing prosperity and the convenience of technology like vending machines, people started guzzling unhealthy amounts of soda.

It’s much the same with the harvesting of personal data. Initially, receiving services for free in exchange for your data didn’t seem like a bad trade-off. But increasingly, consumers are beginning to realize they are getting the raw end of the deal. A tectonic shift has occurred and companies, especially Big Tech, need to make major changes to their approach. 

This is already happening in the world of alternative data – for instance, Suburbia tracks sales of consumer products like Sprite, with zero personal information. It shows there can be real value in non-personal data and it is how we harness it that matters.

Can today’s companies follow in the footsteps of the soda giants, and come up with a new formula for monetization? It might seem impossible, but Sprite shows lemon, lime and consumer benefits can win together. 

How can Facebook solve its privacy crisis? Just ask Otis Elevator

You’d be hard-pressed to think of two terms that have captured the tech zeitgeist more than “big data” and “data privacy”. So what do they have to do with a 160-year-old machine?

Firstly, you might ride this humble box several times a day without realizing its significant contribution to urban life. The elevator was a transformative technology that ushered in the era of the modern city and made skyscrapers possible. 

Like any technology, its evolution over time has had ups and downs, but the advancements made in its history can teach us some important things:

  1. Focus on building trust through action, not communication.

When the first passenger elevators were introduced in the early-to-mid-nineteenth century, the rate of adoption was slow. After all, there was always the risk a cable would snap, plunging the elevator and all its occupants to their possible deaths. “Thanks, but I’ll take the stairs,” was likely the common rejoinder at the time.

The makers of elevators could have dismissed them as one-off incidents, or showed how statistically rare elevator-related injuries and fatalities were. But it wouldn’t have mattered as people simply didn’t feel safe getting in there.

What really changed people’s perception was a critical safety feature that was first demonstrated by Elisha Otis at a world’s fair in New York. As detailed in the book Lifted: A Cultural History of the Elevator, the American inventor stood on a platform high above the audience when the only rope holding it up was cut with an ax on his orders. The safety mechanism kicked in immediately, preventing the platform from plummeting to the ground. 

After this, public confidence in elevators soared, particularly in Otis’ safety elevators. He became inundated with orders, which doubled every year. 

It’s a crucial lesson to social media and tech companies that the elevator pitch for their technology matters less than than their ‘elevator moment’. Most will pay lip service to the notion of privacy, without demonstrating the tangible and practical steps they’re taking to ensure the safety of users’ data. Any organization dealing with personal data needs to plan for worst case scenarios and prepare for them appropriately by having safeguards in place. Only then can they truly protect individual privacy and earn consumer trust. 

2. What seems like an obstacle now will be a pivotal opportunity in hindsight.

When GDPR (General Data Protection Regulation) was first introduced, many companies viewed it as a hurdle to overcome. How could they now monetize their data or personalize their marketing? 

It helps to take a step back into a time when elevators were still manually controlled by an operator. Sitting in an elevator to press buttons all day was an actual paying job. Then, in the 1950s came automatic elevators that didn’t need human operators, though there was just one little problem: People hated them. 

As a professor of architectural history tells The Globe and Mail, there are “stories of people walking into elevators and walking back out”. In fact, it took a good part of a decade for the technology to become commonplace and for people to get used to it.

It seems laughable now, the idea that people didn’t see it as their job to push a button and simply felt uncomfortable doing so. But aren’t we going to also look back at this era, when companies regard privacy regulations as a demanding obstacle, with incredulity? 

After all, GDPR and the growing wave of legislation worldwide should be seen as a watershed moment for businesses. This is a turning point for marketers to stop microtargeting with personal data when there is a wealth of other types of data at their disposal that can be used to generate relevant and effective content. 

There are many ways to personalize marketing without the use of personal data. For instance, there is what GDPR categorizes as pseudonymous data (data that can’t be used to directly identify an individual) like the customer’s local weather. Is it more relevant for a brand to bombard a customer with ads for umbrellas because he viewed them once, or to offer an umbrella to everyone living within a particular area on a rainy day? Does a brand have to know about your allergies, or can it use available pollen count data by geographic region?

Companies simply need to ‘push the button’ and stop seeing compliance as a chore. Instead, they need to embrace data privacy as a valuable opportunity to build trust and use non-personal data more creatively. 

3. Fast and reliable data makes it possible to predict things before they happen.

The elevator has come a pretty long way since Otis brought it into the mainstream. They have not only gotten better, faster, safer – but also a lot smarter. 

On the surface, elevators may not seem to have changed much over the last decades. In reality, the technology that keeps them moving smoothly is cutting-edge. AI and real-time data are being used by major elevator manufacturers for predictive maintenance – so they can spot problems before they arise and better anticipate breakdowns. For instance, ThyssenKrupp’s elevators are connected to the cloud, collecting data from its sensors, and transforming that data into actionable analytics. 

KONE has a similar system that incorporates IBM’s Watson IoT. Using data points transmitted by elevators across the world, KONE can glean historic failure rates of different elevator parts and the preceding conditions. For example, a temperature reading that’s slightly above normal could be a sign of engine trouble, but the system can also note if it’s a hot day, which could be a factor too. Its forecasting also improves as more data is fed into the model. 

Similarly, faster access to better data is needed to make critical business or investment decisions. Relying on traditional sources of information like earnings, filings and economic reports is akin to elevator manufacturers depending on written maintenance records. 

But why wait 90 days for a quarterly report when one can access a steady stream of intelligent data? New sources of information, or what we call alternative data, are constantly generated around us and investment managers can leverage them to get an unprecedented level of transparency into company performance on a near real-time basis.

From anonymized transaction data to price trackers, these can be used to generate predictive insights so proactive decisions can be made, instead of mere reactions to events as they occur. For investors, that can help them forecast market movements and trends, and manage risk. 

To sum it up, businesses and investors need to use data and privacy as the vehicle of change, much as the elevator was once upon a time.