The "buy local" Buzz Points loyalty program is adding mobile marketing technology to increase payments volume for non-chain merchants.  

"We're investing in technology development that enhances how extensively and personally merchants can engage with consumers," says Jay Valanju, the CEO of the Austin, Texas-based Buzz Points, a company formerly known as Fisoc.

Buzz Points plans to use embedded mobile technology such as GPS and emerging data management tools to make its core product of socially-enabled merchant funded rewards operate faster and with a more detailed link between the consumer and merchant. The company has hired data specialists and other developers to build apps that allow offers to be tied more directly to factors such as a consumer's location in relation to a store, the time of a purchase and other behavior.

Its technology enables consumers to make debit card payments at local merchants, earning points to redeem for local gift cards, cash cards and donations to local non-profits. Consumers can also earn points for sharing information about Buzz Rewards on social networks. Merchants pay a monthly fee to participate and extra fees based on points consumers earn through debit payments.

The mix of social networking, card payments and reward redemptions generate a substantial amount of data, and Valanju says the company plans to add location data to generate new campaigns.

"We're using a lot of 'big data' analytics, and are also investing money in expanding our back office systems to handle the extra workflow," Valanju says.

Buzz Points is funded its technology initiatives in part with a new investment round of $19 million from a group of companies that includes Discover Financial, which also partners with Buzz Points via the card network's Pulse debit and ATM network.

It will use the new funding to expand beyond the 13 U.S. states it operates in. The company has increased its sales staff and hopes to add more issuers. It works with about 30 financial institutions, including Guardian Credit Union and Cadence Bank.

Buzz Points' expansion marks a renewed build to grow "buy local" merchant reward services, boosted by increased consumer and merchant use of mobile devices and social networks. Other buy local services have failed in the past. The mobile payment company Bling Nation, for example, folded after merchants became disenchanted with the company's mandatory loyalty program.

"This is still a nascent, albeit very promising, market," says Phil Philliou, a payments consultant. "Companies such as Buzz Points have really only begun to scratch the surface of providing consumers with incentives to buy locally."

The new generation of products for small merchants will leverage best practices from companies such as Groupon, Foursquare and Living Social, Philliou says.

"They'll incorporate geolocation and sophisticated in-store, mobile-based rewards systems," Philliou says.

Many payment companies are taking advantage of location technology such as the embedded GPS function on smartphones and Bluetooth Low Energy beacons to inform marketing and other tasks. Toopher and miiCard, for example, have partnered to use geolocation as part of identity management.

Capital One and Pushpoint are using location-based technology to tie payments to a consumer's location in a store for marketing purposes. Dairy Queen, PayPal, shopkick and American Express are also tying location technology to mobile marketing.

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