Affinity Solutions Inc. is working with Sovereign Bank to launch a mobile, merchant-funded rewards program for the bank's debit cardholders.
The program's mobile application, which works with Apple Inc.'s iPhone, enables cardholders to locate participating merchants and receive discounts immediately at the point of sale through cash back, miles or points, Jonathan Silver, Affinity's president and chief executive, said in an interview. Affinity plans to launch a similar application for Research in Motion Ltd.'s BlackBerry devices and phones that use Google Inc.'s Android operating system in 2011.
Eduardo Tobon, managing director of Sovereign's card division, said in an interview that the rewards program and mobile application are free to the bank's debit customers.
Sovereign, a unit of Banco Santander SA, said it has no plans to also offer the program to its credit-card holders, Tobon said. Sovereign and Affinity, both of Boston, announced their partnership Dec. 3.
Through the application, cardholders may earn up to 20% cash back from such merchants as Duane Reade drugstores, Borders Direct LLC and Banana Republic Inc., Silver said.
The application also enables cardholders to check balance and transaction histories, search for deals closest to their location through the phone's GPS, search for participating merchants by ZIP code and map a route to a specific merchant, Silver said.
Affinity also tracks transaction histories and offers different deals based on past spending. Each cardholder that uses the application may see a deal that is different from one offered to other users, Silver said.
Participating merchants also may offer cardholders additional cash back for noting through the application they are at a specific merchant, Silver said. For example, "cardholders may already receive 10% cash back if they use their debit card at Olive Garden, but if they check in [while there] they may receive an additional 5%," he said.
The application also incorporates merchant offers and rewards through "geosocial networks" such as Facebook, FourSquare and Twitter, Silver said.
Banks pay Affinity a fee based on the application's performance, but the program is free to consumers. Banks also receive a portion of a percentage of each sale merchants pay to Affinity, Silver said. Affinity and Sovereign declined to comment on exact pricing.
Affinity eventually plans to add features to the application, such as receipts that direct consumers to other participating merchants and a rewards-based toolbar that would annotate search results with relevant offers.
Such applications can help merchant-funded rewards programs grow, but they also show that such programs are becoming "more relevant in the mobile channel," said Red Gillen, a senior analyst with Celent LLC.
Using the mobile channel, "merchants may communicate with consumers while they are actually out shopping — influencing them on the fly," he said.
Over time, other companies may follow Affinity's lead and offer similar types of programs, Gillen said.
