Amex and eBay Belly Up to the Barcode

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The use of barcode readers as a transaction and marketing tool — a mobile commerce method popularized by early movers such as Starbucks — is getting a shot in the arm from American Express' new partnership with a barcode scanning subsidiary of eBay that drives consumer traffic back to American Express' merchant rewards program.

American Express and RedLaser have entered into an arrangement in which the information RedLaser's scanners pick up from product barcodes is paired with personalized information on that consumer and his or her participation in American Express' merchant rewards programs.

"There are multi-pronged benefits for financial institutions to offer barcode readers to consumers. It allows banks to deliver customized offers to customers through mobile wallets, or it can help track and identify mobile shopping activity, so the bank can [team with retailers] to match offers or give a competitive offer. There's also the ability for banks and retailers to work together on co-branded or joint offerings," says Andy Schmidt, a research director at TowerGroup.

The app is designed to deliver price comparisons, loyalty perks, real-time special offers, and location-based marketing to consumers' devices while they're shopping. It puts pressure on payment-card-issuing banks and retailers to provide more location-based information for consumers on mobile banking apps, since American Express' roster of retail participants for the service numbers more than 60 thus far.

"This technology puts more power into the hands of the consumers. It's up to the retailers and banks to make it work to their advantage," Schmidt says.

American Express entered into the deal after consumer research indicated that more of its customers are using mobile devices while shopping, and are interested in accessing product information and loyalty apps while on the move. "We estimate more than two-thirds of membership rewards-enrolled card members use a mobile or tablet device," says Dustin Harris, director, membership rewards mobile strategy & development at American Express. "This partnership gives them the ability to use membership rewards points in a way that is already familiar to them, on their smartphones."

RedLaser, which has been downloaded about 15 million times, is a free scanning app that reads barcodes and can access information about store location, prices, and products, including nutrition data for food items. In Amex's case, the information also includes merchant rewards.

To access the Amex program, card members download or update the RedLaser app. The card member taps the membership rewards banner to enable the feature — users can also enable and disable the feature from the RedLaser app settings page. The user scans product barcodes, and if the product is available in the shopAmex catalog, an offer to use membership rewards points will show up at the top of their search results.

"Our card members can access the Membership Rewards Program through a popular tool they are already using without having to download a separate app," Harris says.

While not using actual barcode reading technology, Amex's competitors are also increasing their use of location-based mobile apps designed to combine "walk in" rewards with carrots based on actual purchases. In December, Visa introduced a "shopkick" app that enables mobile users to earn what Visa calls "kicks" by linking Visa debit or credit cards to the card firm's Buy and Collect Program. Users can then make qualifying purchases at shopkick merchants by using the linked card. Shopkick, which counts American Eagle Outfitters, Toys R Us and Old Navy among participating retailers, uses a proprietary location-based app and messaging platform to deliver offers such as "purchase $40 at XYZ retailers and receive 250 'kicks.'"

MasterCard's PR department said it does not presently offer mobile scanning, but it is developing a mobile app that integrates virtual payment with rewards cards as part of mobile wallets that would be offered by issuing banks as a value ad.

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