The electronic payments provider sQuidcard Ltd. has introduced a contactless loyalty card that it said could help small, independent retailers in the U.K. develop deeper relationships with customers.
SQuidcard, of Surrey, already offers cards for the education and transit sectors, and last year tested its loyalty system with a popular coffee chain, Coffee Republic Trading Ltd. Aruna Withane, sQuidcard's business development manager, said the results were enough to roll out the program nationwide.
Retailers can customize their loyalty programs to include cash-back or merchandise discounts after a certain number of visits or purchases, or to support a prepaid gift card function using a microchip embedded in the cards.
"Flexibility is our key, and we obviously don't know their business as well as they know their own business," Withane said.
Withane, who was previously a Coffee Republic general manager, witnessed firsthand how the sQuidcard program can boost sales. Coffee Republic tested the program at several locations: a shopping center, a business center and a London site where it competed against similar quick-service food chains. The program worked best at the business center, where Coffee Republic often served repeat customers, he said.
"The shopping center was difficult because 70% of the people who came were new shoppers who we probably wouldn't see again," Withane said. Loyalty programs work best when they reward customers on second and third visits.
One option is a 10% loyalty plan, he said. In that arrangement, a retailer would load 5 pounds into a customer's card account after they spend 50 pounds in one visit. "The next time the card is presented at the reader, it recognizes the 5 pounds, and the retailer would deduct that amount from their next purchase," he said.
The system tracks a consumer's transaction history at a particular retailer and the rewards earned. Consumers can view their reward totals online.
SQuidcard is not saying how much retailers will pay to participate, but Withane said it is leasing contactless card readers to merchants for $23 per month. SQuidcard integrates the reader and software into merchants' existing payment systems.
SQuidcard receives 1.5% of the sale with no minimum or maximum charge, Withane said. "Even if a consumer spends one pound, we charge you just 1.5% of that pound."
SQuidcard's loyalty efforts are significant because others have chosen not to invest in that space, said Matt Simester, a director at Auriemma Consulting Group. "The economy has an impact on those decisions," he said.
The challenge facing sQuidcard will be in how consumers perceive the value proposition of any loyalty program involving the card. Consumers "won't care" about the contactless cards, he said. "The proposition has to be enough for the consumer to want to use it."
