Affinity Solutions Inc. is partnering with Sovereign Bank to launch a mobile, merchant-funded rewards program for the bank’s debit cardholders, the New York-based marketing and loyalty program provider announced Dec. 3.
The application, which works with Apple Inc.’s iPhone, enables cardholders to locate participating merchants and receive discounts immediately at the point of sale through cash back, miles or points, Jonathan Silver, Affinity president and CEO, tells PaymentsSource. Affinity plans to launch a similar application for both Research in Motion Ltd.’s BlackBerry devices and phones that use Google Inc.’s Android operating system in 2011.
The free application is available from Apple’s iTunes store, Eduardo Tobon, managing director of Boston-based Sovereign’s card division, tells PaymentsSource. The rewards program also is free to the bank’s debit customers, he says.
Sovereign, a subsidiary of Spain-based Banco Santander S.A., has no plans to also offer the program to its credit cardholders, Tobon says.
Through the application, cardholders may earn up to 20% cash back from such merchants as Duane Reade drugstores, Borders Direct LLC and Banana Republic Inc., Silver says.
The application also enables cardholders to check balance and transaction histories, search for deals closest to their location through the phone’s global position system, search for participating merchants by ZIP code, and map a route to a specific merchant, Silver explains.
Affinity also tracks transaction histories, so each time cardholders open the application they will see a deal that may be different from one offered other users, Silver says.
Participating merchants also may offer cardholders additional cash back for noting through the application they are at a specific merchant, Silver says. For example, “cardholders may already receive 10% cash back if they use their debit card at Olive Garden, but if they check in (while there) they may receive an additional 5%, “ he explains.
The application also incorporates merchant offers and rewards through “geosocial networks” such as Facebook, FourSquare and Twitter, Silver says.
Banks pay Affinity a fee based on the application’s performance, but the program is free to consumers. Banks also receive a portion of a percentage of each sale merchants pay to Affinity, Silver notes. Affinity and Sovereign both declined to comment on exact pricing.
Affinity eventually plans to add features to the application, such as receipts that direct consumers to other participating merchants and a rewards-based toolbar that would annotate search results with relevant offers.
Such applications can help merchant-funded rewards programs grow, but they also show that such programs are becoming “more relevant in the mobile channel,” contends Red Gillen, a senior analyst with Celent LLC.
Using the mobile channel, “merchants may communicate with consumers while they are actually out shopping–influencing them on the fly,” Gillen adds.
Over time, other companies may follow Affinity’s lead and offer similar types of programs, Gillen surmises.
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