Hoping to turn the mobile phone into a marketing channel, Visa Inc. and JPMorgan Chase & Co. are testing a system that delivers customized sales offers by text messages.
The test's announcement Thursday was Visa's second notice this week of a service aimed at linking financial services to mobile phones.
Pam Zuercher, the San Francisco company's vice president of product innovation, said it has a four-pronged "channel strategy," aimed at making mobile devices into financial tools and ultimately driving up transaction volume.
"With 3.3 billion mobile devices around the world, in the hands of consumers, it's very natural for Visa to think about extending what we do to the mobile channel, especially with the proliferation of multiapplication" handsets that support texting, Internet access, games, and music, Ms. Zuercher said. "We're excited to have a role to play in that evolution."
She described the marketing test, which began this month in Phoenix, as a "value-added application" aimed at encouraging consumers to make purchases with their cards. Another one is text fraud alerts, for which Visa announced a test Monday. Ms. Zuercher said that test is designed to drive up spending and increase consumer confidence in the notion that a phone can be an important financial tool.
Visa also has contactless payment trials under way in several markets where consumers can use special phones to make payments at the point of sale.
And in India, it is testing mobile money transfers between Visa accounts.
The fourth element of the strategy is mobile card acceptance. For example, vendors are using portable readers to take cards in places where they cannot set up a standard reader, such as flea markets. The payments are authorized over wireless networks.
"We're taking advantage of all the existing assets that we have, and all the end points," Ms. Zuercher said.
Though portable readers could have many applications in this country, such as letting customers pay for plumbers, pizza, or craftsmen, the greatest potential may be in the developing world, she said. "There's a real opportunity to leapfrog infrastructure that hasn't been laid out."
JPMorgan Chase will handle most of the promotion for the mobile marketing test, mainly to consumers ages 18 to 34, using direct mail, e-mail, promotional messages at automated teller machines, and its Web site.
The two companies hope to have 5,000 consumers enrolled in the program by October; JPMorgan Chase Visa cardholders can enroll by sending a text message to JPMorgan Chase or by visiting its Web site.
More than 50 merchants have signed up to participate in the trial, including Chico's FAS Inc., Macy's Inc., Gap Inc.'s Old Navy, Marriott International Inc., Circle K, Papa John's International Inc., and Robeks Corp.
Cardholders can use the Web site to define their preferences. They can say what types of offers they want to receive, such as discounts at coffee shops versus department stores.
"The name of the game is really customization," Ms. Zuercher said.
Most of the offers will likely come as discounts for purchases made with JPMorgan Chase Visa credit and debit cards, she said. The customer would receive a redemption code by text message that could be processed at the point of sale.
Visa and JPMorgan Chase will analyze the enrollment, redemption, and customer preference data, and by late next quarter they hope to have enough information to plan the next step, Ms. Zuercher said. "We want to move as quickly as we can to commercialization, but we want to be sure we deliver an optimized service to the marketplace."
For now JPMorgan Chase and Visa are doing the primary promotion of the service, she said. A pizza restaurant, for instance, probably would not put up posters in its dining room promoting the service until it is commercially available.
Eileen Serra, a Chase Card Services executive, said in a press release that the service would "deliver compelling offers from top merchants directly to consumers' mobile devices" and could help "increase spending and create greater loyalty for merchants participating in the trial."
Richard K. Crone, the founder of Crone Consulting LLC in San Carlos, Calif., said card issuers carefully analyze transaction details so they can customize the offers they send with the monthly statement.
"But that is limited to monthly contact," Mr. Crone said. "These offers can be communicated when they have the most impact — at the point of sale."
Issuers will spend $13 billion on rewards, loyalty programs, and incentives this year, he said. "That's a pretty expensive way to keep customers. This would actually generate revenue for the issuer."
Bruce Cundiff, a research analyst at Javelin Strategy and Research of Pleasanton, Calif., compared mobile marketing to the rollout of cobranded cards, when banks and merchants tried a variety of approaches to appeal to consumers.
"I don't think we're at a point where there are tangible results," but Visa and JPMorgan Chase have taken the right approach by offering the mobile marketing service to consumers on an opt-in basis, he said. "You can't fumble in these early stages by sending unwanted offers to consumers. That's paramount."
