The Waltham, Mass., micropayment aggregation technology vendor Peppercoin Inc. has introduced reward software that merchants can use to motivate customers to use cards instead of cash at the point of sale.
Mark Friedman, Peppercoin’s president and chief executive, said the software links credit or debit cards to loyalty accounts, so customers need not carry around separate loyalty cards.
The software is aimed at “transforming what had historically been routine card transactions into new revenue opportunities” for merchants by attracting repeat business, he said.
Merchants can enroll customers quickly when they make a purchase by asking if they want to participate, Mr. Friedman said. “Just by saying yes, you’re automatically enrolled into the program.”
On subsequent visits, points are added to the reward account every time the customer uses the linked card, and the point total is printed on the receipt. Merchants can select the threshold for earning rewards.
Even though the software uses a consumer’s card for identification, it conforms to Payment Card Industry standards by not storing payment information, Mr. Friedman said.
The Cambridge coffee and ice cream chain Toscanini’s will begin using the software next week, he said. It will also use Peppercoin’s virtual prepaid card software, which lets customers use a prepaid account without a plastic card — balance information is printed on each receipt.
The Beverly Hills online audio workout vendor iTrain LLC is also expected to offer its customers the Peppercoin reward program soon.
Peppercoin made its name with software that merchants, especially online retailers, use to aggregate several small card purchases into a larger one that carried lower processing fees.
The loyalty software, which is being sold as a module in its small-payment suite, is also aimed at encouraging more card transactions of any size, Mr. Friedman said. Peppercoin is “focused on the whole cash-to-card transition.”
Dan Schatt, a senior analyst for the Boston market research firm Celent LLC, said Peppercoin’s product “is a step in the right direction” in getting more merchants to accept card payments.
“Interchange is still pretty high,” and merchants need a compelling reason to pay those fees to accept cards, Mr. Schatt said. “The only cost to the merchant that’s greater than interchange is the cost of continually losing their customers,” he said.
“This is one way to counter that. This could potentially pull some merchants” who had refused to accept cards “over the fence.”
In addition, using cards usually “results in a higher ticket size,” so merchants could increase their revenue by encouraging repeated card use, he said.
Most other efforts to eliminate cash by rewarding customers are less flexible, typically focusing on specific card brands or on automated clearing house transactions instead of letting consumers use the card of their choice, Mr. Schatt said.
Offering a program like Peppercoin’s “is something that would be hard for the associations to do,” he said, because they could reach only consumers who have a card with that association’s brand.
