A new cloud-based merchant loyalty scheme has earned the backing of a major payments processor and some large retailing chains.

Merchants' Choice Payment Solutions, a Woodlands, Texas-based super independent sales organization and processor, is about to begin offering the product to ISOs for promotion to small and medium-sized merchants, according to the vendor, Dallas-based vPromos Inc.

"About 30 other ISOs are in the process of reviewing the program and getting comfortable with it," says Steven Neel, vPromos' chief operating officer.

Meanwhile, some big chains with thousands of locations are conducting pilot tests, Neel says.

To use the product, merchants simply enter a consumer's cell phone number on a payments terminal and the system does the rest automatically, he says.

Entering the phone number registers the shopper in the merchant's loyalty program, freeing consumers from the need to download an app, fill out boxes on a website, use a mobile wallet or even own a smartphone, Neel says. They don't have to carry a card either.

Every time a registered consumer swipes a payment card at the store or restaurant, the system serves as an automated punch card that records the visit and tracks frequency. That function, called vPunch, also automatically informs the consumer of progress toward a reward.

Consumers also can earn vPunch points by writing a review on Yelp or Urbanspoon, or by "liking" the business on Facebook.

When redemption time comes, the system automatically deducts the amount of the reward from the bill and issues a receipt that reflects the reward, Neel says.

Retailers can choose to split the rewards and encourage members to share the bonuses with friends by email or on social networking sites, Neel says. That registers additional consumers in the program and gives the new member a reason to visit the store or restaurant where they have already earned points and can begin working toward rewards.

Another function, Voupons, provides coupons or offers that merchants can send automatically to members via email or text message. As with vPunch, the system can redeem the Voupons at the point of sale by deducting the specified amount and informing the consumer on the receipt.

The vendor charges a monthly fee that's marked up by the ISOs and agents involved, Neel says.

Collecting the fee shouldn't cause acquirers too many headaches, he claims, because they can establish the service by downloading an "admin packet" that enables a payment terminal to communicate with the vPromos software in the cloud.

The ISO also plugs in two data points – the merchant's industry and average ticket. That information forms the basis of the marketing plan, which retailers can modify if they choose.

The system works with several terminal models from San Jose, Calif.-based VeriFone Systems Inc., Neel says, adding that vPromos does not intervene in ISOs' relationships with their terminal distributors.

The vendor intends to use ISOs to reach small and medium-sized merchants but plans to maintain an internal sales force to call on large national chains, Neel says. The model that fits the general perception that ISOs shy away from the long sales cycle and specialized knowledge needed to sell to larger chains.

The product has won the approval of Merchants' Choice Payments Solutions, a super ISO and processor, that plans a "soft launch" in October and a serious campaign by the end of the year, says Todd Linden, the firm's executive vice president and chief operating officer.

Linden heads a team of 13 who evaluate products and services to choose the likely winners and then decide how ISOs and agents should present those most promising offerings to merchants, Linden says.

"We have a group that works for me," he says. "They're targeted solely at packaging the product so it can be taken off of the shelf and taken to the ISO and down-streamed to the sales reps in such a way that it leaves no questions."

That means developing sales approaches and deciding what merchants to approach with products, Linden says.

"We're so big on packaging," he says of the way ISOs offer products to merchants. "So many companies … sign contracts and listen to the pitches and then never get any traction with the product."

Parts of the approach have yet to become final, he notes. For example, salespeople who offer transaction services also could sell vPromos, but in some cases salespeople who specialize in value-added services might make the pitch.

He sees a future for vPromos in restaurants, where promotions could drive traffic during slow periods, and stores that depend upon repeat business, such as sporting goods purveyors that change their wares to coincide with seasonal sports.

Some introductory pricing might make sense, but the product has the potential to become profitable, Linden maintains.

"It has too many moving parts to get commoditized," he observes.

Besides, merchants too small to employ a marketing specialist or even to hire a marketing firm could use the marketing help, Linden says.

Finally, vPromos strikes Linden as the type of value-added product that not enough ISOs are using to differentiate themselves from competitors.

"Let's embrace these things and help them grow," he says of such products. "It improves our industry's importance to the merchant community."

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