9 inventive loyalty plays
July 21, 2017 10:27 AM
The payments industry has come a long way with how it treats loyalty and rewards. Here are some of the more creative offerings to come about this year.
Simon Dawson/Bloomberg
Amazon Prime Reload
On the surface, Amazon's new loyalty cashback program, Amazon Prime Reload , appears to be just another benefit of enrollment in Amazon Prime, the $99 annual membership program that provides discounts and access to a range of goods and services.
However, a deeper dive into the workings of the program — which offers 2% cash back when shoppers use a debit card or bank account to load an Amazon stored-value account — should give the card payments industry serious cause for concern.
The banks and card networks fought relentlessly with PayPal over the years against its use of a similar practice of using linked bank accounts to cut its own payment costs. Visa and its peers finallyconvinced PayPal to change its ways , but it seems now that this battle was fought on the wrong front.
If Amazon succeeds in convincing shoppers to use their Amazon Balance instead of a payment card, issuer revenues from Amazon will dip dramatically as the retailer shifts more reload volume to ACH.
But the softer implications may be more troubling longer term. Amazon Prime Reload effectively blocks brand recognition for networks and issuers in the Amazon ecosystem to visibility only at the point of reload. With the psychology of QSR gift card dynamics being used for reloading, it is plausible that Amazon will take this a step further and enable auto reload at a low balance threshold, effectively making the issuer and network entirely invisible.
Card networks and issuers will not only lose revenue and brand recognition, but will also lose transparency on consumer transaction behavior, shifting the balance of power in terms of customer data analytics back to Amazon.
However, a deeper dive into the workings of the program — which offers 2% cash back when shoppers use a debit card or bank account to load an Amazon stored-value account — should give the card payments industry serious cause for concern.
The banks and card networks fought relentlessly with PayPal over the years against its use of a similar practice of using linked bank accounts to cut its own payment costs. Visa and its peers finally
If Amazon succeeds in convincing shoppers to use their Amazon Balance instead of a payment card, issuer revenues from Amazon will dip dramatically as the retailer shifts more reload volume to ACH.
But the softer implications may be more troubling longer term. Amazon Prime Reload effectively blocks brand recognition for networks and issuers in the Amazon ecosystem to visibility only at the point of reload. With the psychology of QSR gift card dynamics being used for reloading, it is plausible that Amazon will take this a step further and enable auto reload at a low balance threshold, effectively making the issuer and network entirely invisible.
Card networks and issuers will not only lose revenue and brand recognition, but will also lose transparency on consumer transaction behavior, shifting the balance of power in terms of customer data analytics back to Amazon.
Chris Ratcliffe/Bloomberg
Digital punch cards
One of the biggest goals of mobile payments has been connecting the consumer transaction with a store’s loyalty program to leverage data for customized offers, but many quick-service restaurants have struggled to make that happen.
Mobile marketing specialists like LevelUp andPunchh are making headway by linking purchase data from transactions with loyalty and rewards programs, but the two companies are split on how they use Near Field Communications-powered mobile payments, underscoring an ongoing dilemma.
Punchh is betting that NFC—still not widely available at most merchant locations years after its introduction—will eventually become ubiquitous, and it hopes to get an edge with clients with a direct connection to Apple Pay, enabling consumers who pay via NFC in stores to simultaneously earn and redeem restaurant loyalty program points.
Walgreens customers have been able to earn loyalty points using Apple Pay since 2015, and last year Kohl’s enabled its app users to earn points when paying with Apple Pay, but Punchh is an early mover in the restaurant industry, said Shyam Rao, Punchh’s CEO.
“Restaurant loyalty has been broken for a long time, but now a customer can walk into a restaurant, pay with Apple Pay and simultaneously get loyalty points and offers on the spot, creating a smooth, multi-channel loyalty experience for customers paying online, in-app or in stores,” Rao said.
Punchh plans to add Android Pay to its restaurant loyalty platform and is currently in discussions with Google about enabling its NFC payment service by the end of the year, the company said.
Mobile marketing specialists like LevelUp and
Punchh is betting that NFC—still not widely available at most merchant locations years after its introduction—will eventually become ubiquitous, and it hopes to get an edge with clients with a direct connection to Apple Pay, enabling consumers who pay via NFC in stores to simultaneously earn and redeem restaurant loyalty program points.
“Restaurant loyalty has been broken for a long time, but now a customer can walk into a restaurant, pay with Apple Pay and simultaneously get loyalty points and offers on the spot, creating a smooth, multi-channel loyalty experience for customers paying online, in-app or in stores,” Rao said.
Punchh plans to add Android Pay to its restaurant loyalty platform and is currently in discussions with Google about enabling its NFC payment service by the end of the year, the company said.
Feng Yu - Fotolia
Heavy metal
A few years ago the battle among elite travel credit cards centered on topping rivals’ gigantic signup bonuses , and now it’s all about who’s got the heaviest physical card, along with a few other perks.
Citigroup is trying to gain an edge in the hotly contested category by introducing these competitive elements to its revamped Citi Prestige card.
This week Citi rolls out a new version of its Prestige credit card that weighs more than twice as much as the older plastic card, according to Citi. This brings Citi’s Prestige card—which carries a $450 annual fee—on par with rivals asmetal becomes the new status marker among top-tier cards from issuers including American Express Co., JPMorgan Chase & Co. and Capital One Financial Corp.
“In a commoditized business like credit cards, issuers are looking to the card'sappearance itself as a distinguishing factor, and it’s interesting that many premium cards are now issued in metal, but ultimately customers respond to the whole card’s features and value,” said Brian Riley, director of credit advisory services at Mercator Advisory Group.
This week Citi rolls out a new version of its Prestige credit card that weighs more than twice as much as the older plastic card, according to Citi. This brings Citi’s Prestige card—which carries a $450 annual fee—on par with rivals as
“In a commoditized business like credit cards, issuers are looking to the card's
Anthony Kwan/Bloomberg
Android API
Google is getting in on the card-linked offers movement with a new API enabling merchants to send targeted offers to consumers who store a loyalty card within Android Pay.
Panera Bread is among the first merchants to use the feature nationally with the restaurant chain’s MyPanera loyalty card, according to ablog post by Pali Bhat, Google's vice president of payments.
Bloomberg NewsMerchants may manage offers within the Android Pay app, and consumers who link a loyalty card can tap on the “loyalty” area within Android Pay to explore offers. At Panera, offers are redeemed at the checkout when customers pay with their MyPanera account, Google said.
The service hinges on Google’s new Card Linked Offers API, which operates within the existing Save to Android Pay API, enabling merchants to support discounts, loyalty programs and gift cards within the Android Pay app.
Panera Bread is among the first merchants to use the feature nationally with the restaurant chain’s MyPanera loyalty card, according to a
Bloomberg NewsMerchants may manage offers within the Android Pay app, and consumers who link a loyalty card can tap on the “loyalty” area within Android Pay to explore offers. At Panera, offers are redeemed at the checkout when customers pay with their MyPanera account, Google said.
The service hinges on Google’s new Card Linked Offers API, which operates within the existing Save to Android Pay API, enabling merchants to support discounts, loyalty programs and gift cards within the Android Pay app.
Luke Sharett/Bloomberg
Powering up Plenti
ExxonMobil's contactless and mobile payment system, Speedpass , is well known as a way to help drivers accelerate the payment process after they fill up on gas. The system's latest updates focus less on the payment process and more on flexibility and rewards.
Speedpass dates back to1997 , when it operated as a wireless keyfob that motorists used to pay for fuel. The latest version, called Speedpass+, is an app-based payment system that debuted in March of last year and now works at 90% of ExxonMobil's more than 11,000 stations nationwide.
ExxonMobil also participates in the multi-merchant Plenti loyalty program, but bringing Plenti rewards to its full network of gas stations was a complicated process.
Despite this complexity, Plenti is integrated into over 90% of ExxonMobil's U.S. network. On May 15, the company launched a promotion that offers 2,000 Plenti points—worth $20—for three purchases of at least 10 gallons of gas.
Plenti, which is managed byAmerican Express , includes many members such as AT&T, Macy’s and Rite Aid; it added its first grocer, Southeastern Grocers LLC , in March. Plenti does not allow two direct competitors to participate in its program, so ExxonMobil will be the only gas station brand in its footprint.
Speedpass dates back to
ExxonMobil also participates in the multi-merchant Plenti loyalty program, but bringing Plenti rewards to its full network of gas stations was a complicated process.
Despite this complexity, Plenti is integrated into over 90% of ExxonMobil's U.S. network. On May 15, the company launched a promotion that offers 2,000 Plenti points—worth $20—for three purchases of at least 10 gallons of gas.
Plenti, which is managed by
Christopher Dilts/Bloomberg
Thank You points expand
Citigroup is expanding its payments partnership with PayPal to allow its card members to use their ThankYou rewards points for purchases at PayPal checkout in the U.S.
The new functionality is slated to begin in 2018. Citi said the new capability is part of an overall effort to upgrade its mobile offerings, including the ability to dispute certain credit card charges, view or download PDF statements, as well as track the steps of their replacement credit card delivery in real-time within the Citi mobile app.
“We continuously strive to enable consumers to transact when they want and how they want,” said Ralph Andretta, head of U.S. branded cards at Citi, in an emailed statement. “Our expanded agreement with PayPal will enable our 14 million ThankYou Rewards members in the U.S. to utilize an innovative, intuitive new channel to redeem their points."
Andretta added that the company is looking forward to taking the capability global "in the near future."
The new functionality is slated to begin in 2018. Citi said the new capability is part of an overall effort to upgrade its mobile offerings, including the ability to dispute certain credit card charges, view or download PDF statements, as well as track the steps of their replacement credit card delivery in real-time within the Citi mobile app.
“We continuously strive to enable consumers to transact when they want and how they want,” said Ralph Andretta, head of U.S. branded cards at Citi, in an emailed statement. “Our expanded agreement with PayPal will enable our 14 million ThankYou Rewards members in the U.S. to utilize an innovative, intuitive new channel to redeem their points."
Andretta added that the company is looking forward to taking the capability global "in the near future."
Susana Gonzalez/Bloomberg
Prime-like loyalty
One big worry for retailers is Amazon Prime, which provides two-day shipping and numerous other perks to customers who agree to pay $99 a year. Like most of what Amazon is doing, it's a huge encroachment on traditional and online retail.
"Amazon Prime is a premium loyalty product that is crushing the competition," aid Tom Caporaso, CEO ofClarus , a provider of loyalty and marketing systems.
To help address that challenge, Clarus has hired Giri Nathan, a former Priceline executive with experience scaling programs, to be Clarus' chief technical officer. While at Priceline, Nathan helped manage a white label business that used Priceline's engine to tailor hotel booking, flight and car rental services around a partner's brand.
His experience will help Clarus improve a similar product, in which it creates and manages branded loyalty programs, as well as the graphics, landing page hosting and creation and integration with online enrollment, Caporaso said. The company did not make Nathan available for an interview for this story by deadline.
Clarus wants to extend and scale the white label program, with a particular focus on premium loyalty programs like Amazon Prime.
"Amazon Prime is a premium loyalty product that is crushing the competition," aid Tom Caporaso, CEO of
To help address that challenge, Clarus has hired Giri Nathan, a former Priceline executive with experience scaling programs, to be Clarus' chief technical officer. While at Priceline, Nathan helped manage a white label business that used Priceline's engine to tailor hotel booking, flight and car rental services around a partner's brand.
His experience will help Clarus improve a similar product, in which it creates and manages branded loyalty programs, as well as the graphics, landing page hosting and creation and integration with online enrollment, Caporaso said. The company did not make Nathan available for an interview for this story by deadline.
Clarus wants to extend and scale the white label program, with a particular focus on premium loyalty programs like Amazon Prime.
Chris Ratcliffe/Bloomberg
Loyalty tapping
As contactless payment cards gain more momentum in U.K., supermarket giant Tesco wants to be sure its store loyalty card doesn't get left behind.
Tesco is upgrading 17 million Tesco Clubcards to contactless technology, which observers say is an industry first among store loyalty cards—and potentially a costly one—though the benefits of the move are hard to gauge.
The new card has no payments feature and replaces the older bar code card. Tesco also has expanded the benefits features of its Clubcard program, including enabling users to apply points toward payments from Uber and Hotels.com. Payqwiq, Tesco's mobile payments app, can also award Clubcard loyalty points with each store purchase.
Tesco is treating the upgrade as a noteworthy change to accommodate the full range of customer preferences, and the company has assigned 2,500 store workers to assist consumers with the transition this month.
Tesco is upgrading 17 million Tesco Clubcards to contactless technology, which observers say is an industry first among store loyalty cards—and potentially a costly one—though the benefits of the move are hard to gauge.
The new card has no payments feature and replaces the older bar code card. Tesco also has expanded the benefits features of its Clubcard program, including enabling users to apply points toward payments from Uber and Hotels.com. Payqwiq, Tesco's mobile payments app, can also award Clubcard loyalty points with each store purchase.
Tesco is treating the upgrade as a noteworthy change to accommodate the full range of customer preferences, and the company has assigned 2,500 store workers to assist consumers with the transition this month.
Michael Short/Bloomberg
Better beacons
Apple's plans to display a bright blue bar on iPhone screens when an application is monitoring the user's location may feel like a threat to location-based marketing. More likely, it is an overdue wake-up call for retailers and banks to improve their communication about the benefits of location data.
The premise behind Apple'slocation data change in iOS 11 is to help users differentiate legitimate businesses using location data to send valuable messages and offers, from those with less noble intentions. Background activity such as location detection can also be a battery drain , so it benefits Apple to give users more control over how their iPhones consume power.
Banks and retailers increasingly use location data to send location-based offers or to alert customers when they're near a store that accepts mobile payments. Under Apple's plan, the implication is that consumers will want to turn off those apps to guard their privacy and make their phones more efficient.
But that blue bar could turn out to be less of a warning signal and more of a call to action.
The change could benefit app developers and merchants that rely on location monitoring, said Asif R. Khan, founder and president of the Location Based Marketing Association, whose members' livelihoods rely on effective multi-channel messaging through connected devices.
"If this development comes in the next Apple release, it is a step in the right direction for the industry," Khan said. "There is a lot of value in location, but the onus is on the developer to articulate that."
The premise behind Apple's
Banks and retailers increasingly use location data to send location-based offers or to alert customers when they're near a store that accepts mobile payments. Under Apple's plan, the implication is that consumers will want to turn off those apps to guard their privacy and make their phones more efficient.
But that blue bar could turn out to be less of a warning signal and more of a call to action.
The change could benefit app developers and merchants that rely on location monitoring, said Asif R. Khan, founder and president of the Location Based Marketing Association, whose members' livelihoods rely on effective multi-channel messaging through connected devices.
"If this development comes in the next Apple release, it is a step in the right direction for the industry," Khan said. "There is a lot of value in location, but the onus is on the developer to articulate that."
