The gift and loyalty services company SparkBase LLC is using $3 million in new funding to hasten the development and deployment of its technology platform and mobile services.
The investment comes as mobile loyalty is becoming more ubiquitous thanks to efforts from companies such as Groupon Inc., Shopkick Inc. and Google Inc.
"It's no secret what's going on out there," said John Heaney, SparkBase's brand director. "Anyone can take a look at the market and see where it was headed.
That was the impetus behind the funding — to propel the development and deployment of the technology."
North Coast Angel Fund, the Ohio TechAngels and Blue Olive Partners LLC are the three investment firms providing the funding.
Indeed, mobile loyalty is becoming a primary focus in the payments industry, said Todd Ablowitz, the president of the payments consulting firm Double Diamond Group.
"The wild, surprising success of Groupon has captivated everyone," Ablowitz said. "Groupon is building on the idea to create more value and create more deals locally."
Consumers use SparkBase's PayCloud system to join merchant loyalty programs in an area, Heaney said.
They choose programs based on a map that shows merchants that use PayCloud. Consumers then receive coupons and promotions sent by an online platform.
PayCloud stores information related to the program, including reward points, Heaney said. The free app is available for Apple Inc.'s iPhone and phones running on Google's Android mobile operating system.
Consumers may redeem coupons and points at brick-and-mortar locations through a proprietary device SparkBase sells to merchants for between $30 and $50, according to Heaney.
The device is a sensor about the size of an iPhone that plugs into a merchant's point of sale terminal.
Users open the PayCloud app and wave their phone near the sensor to interact with the device over an encrypted signal, Heaney said.
The signal is not enabled using near-field communication technology, which is favored for mobile payments, Heaney said. He did not specify the technology.
SparkBase worked with the technology company Naratte Inc. of Palo Alto, Calif., to develop the system.
SparkBase, of Cleveland, introduced PayCloud in April at the annual Electronic Transactions Association conference.
It plans to test the loyalty service this month with about 36 merchants, which Heaney did not name, throughout the Midwest.
Merchants may add PayCloud through their independent sales organization partnerships.
SparkBase deals exclusively with merchant acquirers, which offer different services packages and pricing to businesses, Heaney said.
SparkBase plans to add a payment component, Heaney said, but he predicts that consumers will be slow to ditch plastic in favor of phones for purchases.
