If you have read my blogs, you will notice a bias towards real time card linked promotions and loyalty versus delayed card linked promotions. As a refresher, delayed card linked promotions put the rewards back on the credit card statement or in some form of cash back or airline points model. That is very 1990s. The future of card linked offers I believe is real time, which enables the consumer to enroll right at the point of sale, receive real time text or email acknowledgment of points earned, and significantly, automatically redeem the reward back at the same merchant where the points were earned.
For delayed card linked offers, assuming a sale can be made to the merchant to market with delayed card linked offers, enabling the merchant to accept delayed card linked offers is not hard. All that has to happen is that the merchant needs to sign a contract authorizing his merchant credit card bank to share the data with the matching company, which then shares matches with the marketing company. This means any company can really do this. The barrier to entry is pretty small. The benefit to the merchant is smaller still as addressed in my previous blogs.
For real time card linked offers and loyalty, the barrier to entry is much higher. Real time is harder to implement because it’s integrated into the credit card terminal or the point of sale system (“POS”). The terminal or point of sale system must do three things. First, it must redirect the transaction amount to a gateway, which then relays the transaction data back into the data stream. Second the terminal or POS must be able to allow for registration at the point of sale. And third it must be able to print out the receipt showing points earned or reward redeemed. If the POS is involved, it has to account for the redeemed offer or reward discount.
There are two channels or industries that make sense for reselling real time card linked; the merchant acquiring independent sales organizations (“ISO”) sales channel and POS companies. Terminal companies use the ISO sales channel to resell their product as do many POS companies. Larger POS companies have their own direct sales teams and network of resellers. Marketing companies are not going to be able to resell real time card linked promotions and loyalty because of the integration requirements described above. This is good for the ISO industry mired in commodity pricing, and looking for the next big thing.
ISOs today are looking for products to compete with the likes of Belly, Level Up, and other loyalty companies that do not touch the payment stream. As discussed in previous blogs, Real time Card Linked loyalty and promotions require no additional steps to earn points or redeem rewards. Simply pay with the enrolled credit or debit card, and loyalty happens.
The ISO is the perfect party to resell real time card linked promotions and loyalty to the merchant. 2014 is going to be the year of the real time card linked promotions and loyalty. Stay tuned.