Using Payments to Teach an Old Business Model New Tricks

Picking up where early-Internet entrepreneurs left off a decade ago, Jingit LLC is working with U.S. Bancorp to revitalize the business model of compensating consumers for watching ads online.

This business model has taken many forms (such as NetZero, which once required users to watch ads to receive Internet access), but it has largely floundered. The difference for Jingit, the vendor says, is that it focuses on making payments to consumers as seamless as possible.

When consumers watch the advertisements Jingit presents online or on their mobile devices, between six and 50 cents is immediately credited to an online account. This money can be spent online or transferred in real time to a prepaid Visa Inc. debit card issued by U.S. Bank, which is the custodian for the online funds.

The payments aspect "creates a conversation between the [bank] brand and the consumer" that can be used to cross-sell other products, says Dominic Venturo, chief innovation officer for U.S. Bank.

Working with Jingit is "a good account acquisition strategy for us," Venturo says. Down the road, the same customers may be interested in college loans and college savings plans as well as auto loans and home mortgages.

About 2,000 users have signed up for the service, and about a third of those have applied for the debit card, says Todd Rooke, Jingit's chief executive, who presented the technology Wednesday at the FinovateFall conference in New York. Jingit is working with about a dozen national retailers, including Oakley Inc., Sony Corp. and T-Mobile USA Inc.

"This is not a passive [advertising] model, it is a very segmented and direct model where you are actually engaging with people," says Rooke.

Jingit users can earn only about $5 per day. Advertisers target them based on age, gender and location. Jingit gets a percentage of the payout, and U.S. Bank makes money when its cards are used.

In the next few months, Jingit also plans to let customers link other card accounts to their prepaid debit cards. Users would draw from those linked accounts to fund purchases even when they have not earned enough from Jingit to cover the transaction. U.S. Bank will handle those transactions through its Elavon merchant processing platform, Venturo says.

Jingit may succeed because it doesn't cost banks to participate, and it offers something tangible to consumers, says Bart Narter, senior vice president of Celent's banking group.

This technology might be a good way to target the young consumers who are more likely to use mobile banking, says Ron Shevlin, a senior Analyst for Aite Group.

"It is a niche product but it is perhaps a good Generation Y product because it presents banks with an opportunity to acquire customers and grow with them as they move to more regular types of accounts," Shevlin says.

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