A prominent card industry consultant has turned his attention from the advice business to marketing a patented product that he says will let consumers select and combine multiple loyalty programs from different vendors on a single piece of plastic.
Holger Mackenthuns CardSelect International, which opened in 1997 to consult on cards and Internet banking and in 1999 won the patent on a gateway apparatus for designing and issuing multiple-application cards, now says it is ready to offer its system for integration into banks services.
The Malvern, Pa., company says its technology will let consumers use the Internet to join an assortment of loyalty programs air-mile, frequent-shopper, and the like. They would need just one card be it a virtual card, a magnetic stripe card, or a smart card to pay for purchases and to accumulate and track merchant loyalty points or miles.
Mr. Mackenthun, CardSelects founder and president, says issuers have to give consumers more variety and value if they are to distinguish themselves in the saturated credit card market and get strong response to new card offers.
My view is that credit cards and smart cards will only be successful if the consumer can pick and choose what applications they want on the card, he said. In this case, its multiple loyalty applications. Maybe somewhere down the road there will be other applications.
Such an all-in-one card could simultaneously track rewards at the cardholders choice of companies: an airline, a car rental firm, a hotel chain, a long-distance carrier, a retailer. A demonstration at CardSelects Web site shows a card that is issued by a single (fictitious) bank and that pictures the banks logo along with the consumers photograph, a hologram, and logos from five companies with rewards programs (Blockbuster Video, Hilton Hotels, Delta Airlines, Avis, and Amtrak).
Since these companies have exclusive cobranding deals with a host of card issuers, there is no way under the current system that any consumer would be able to go through one bank and sign up for five rewards programs of this stature. The CardSelect concept is that a bank card issuer in cobranding deals with several companies could offer an array of reward programs from its partners.
The company plans to link existing rewards programs directly to one transaction card. That means people would not have to carry and present a bunch of reward cards and could sign up for any number of rewards programs on a card issuers Web site.
Each time a cardholder used the card at one of the preferred vendors, points would automatically be added to the appropriate account. Those shopping at a location that does not belong to one of the cobranded vendors could have those points applied toward a merchant they would have to designate in advance. Its an automatic tracking tool, Mr. Mackenthun said.
Before founding CardSelect, Mr. Mackenthun was president of Orga Card Systems Inc., a U.S. subsidiary of the German company Orga Kartensysteme GmbH, which develops and supplies smart card technology. He said he is in discussions with several U.S. card issuers, but would not name any.
Card issuers must find ways other than low interest rates to differentiate their products and brands in a crowded marketplace, Mr. Mackenthun said. Thats why we are confident that our loyalty program solution will help banks create an exciting value proposition for their cardholders and associated merchants.
Ralph Rolen, executive vice president of retail credit for First Tennessee National Corp. in Memphis, called CardSelects product an interesting twist on the credit card enhancement market.
But these things are difficult to assess, he added. What is the customer profile that would be interested in this card? Do I have enough of those customers to make the cost worthwhile to me?
Since 1993, First Tennessee has issued a Visa First Travel Card that lets consumers accumulate air miles they can use at any airline. Before issuing the card, the banking company did some research to find out what bank members wanted, and our studies showed people were most interested in air travel, Mr. Rolen said. Thats what our card focuses on.
Given that frequent-flyer cards and other rewards cards are the most popular products in the card market and go to people with the highest credit ratings some observers are skeptical whether card issuers and their partner companies will want to offer these programs more broadly.
Frankly, Im dubious, said Jerome Svigals, director of the Smart Card Institute in Redwood City, Calif. Its nice to have the increased options, but the bad news is it will take longer to accumulate a meaningful total for any one of the programs.
