The creation of mobile wallets sparked a battle between retailers and wallet providers over the control of consumer data, and the evolution of card-linked services has the potential to stray into a similar minefield.
Companies providing the technology for card-linked services allow banks and retailers to offer the customers coupons and discounts that can automatically link to their credit or debit cards through mobile devices. When the consumer redeems the coupon through a credit card, the discount is automatically applied to his monthly billing statement.
"One of the major concerns for retailers is the potential for a competitors card-linked offer advertisement to appear on the same consumer billing statement in which transactions from their store are listed," says Richard Crone, chief executive of San Carlos, Calif.-based payments consulting firm Crone Consulting LLC.
The technology wow factor that card-linked offers and discounts can provide consumers and merchants alike could potentially be offset by retailer concerns about who controls the transaction data, says Crone.
Tom Burgess, CEO of Boston-based Linkable Networks, agrees that is a potential problem, one that his company wont touch. Such an approach helped Linkable Networks technology receive an endorsement this week from the American Bankers Association for its community bank members.
"We just dont play in that environment [of displaying ads on billing statements]," Burgess says. "We built a platform that operates in the outside world, supporting ads in any medium from TV to print to digital that the consumer accesses through a mobile device."
Transaction data ownership is a valid concern for retailers, often referred to as "conquest analytics" because competing in-category merchants are given the opportunity to present offers to the same individual in hopes of drawing them away from a favored merchant, says Christopher McClinton, vice president of payment solutions for Washington, D.C.-based American Bankers Association.
But the ABA looked favorably upon Linkable Networks because it does not participate in conquest analytics or share its limited transaction data with other merchants, McClinton adds.
"These are things we look at during the vetting process," McClinton says. "Many community banks dont have the resources to perform this exercise given the breadth of product offerings."
The ABA seal is a trusted signal to its members and to the industry that organization has looked closely at a particular product and endorses it, he adds.
Where a consumer ultimately links an offer to a payment card will be a vital aspect of the technology in the future, says Crone. "Where the links happen, will go the spoils," he adds.
Consumers can click on links to attach offers to their plastic cards through a mobile banking application, a retailer application or through a third-party intermediary, Crone says.
"If banks get the card-linked offers, they hold the data, and they may be cutting off the hand that feeds them if retailers are not happy with that," Crone says.
Linkable Networks operates on a "double consumer opt-in" process, Burgess says.
"The consumer owns the transaction data, so we ask for explicit consent of the consumer to enable the card to accept offers and that they agree to share their data for this program," Burgess says.
Card-linked offers are considered "transaction-driven," meaning merchants only fund offers that consumers redeem while also getting a better understanding of a consumers buying history, Burgess says.
"What happens with the data is massively important," Burgess says. "That is why we are PCI [Payment Card Industry] compliant at all levels and operate the consumer opt-in."
Regardless of potential data questions, card-linked offers are becoming increasingly popular with banks and their customers.
Linkable Networks has established relationships with all of the card brands and PayPal for linking offers, which means card-issuing banks have no technology requirements related to the consumer cards, Burgess says.
"We support offers such as $10 off in general, or 10% off a particular item," Burgess says. "Thats important for merchants to fund their own campaign."
At the same time, card-linked offers reinforce the value of plastic cards and the use of mobile devices, Burgess says.
"Mobile has the future power to be the consumer wallet, but not right away," Burgess says. "And there will always be a card behind it that represents the account and payment rails."
The concept of a card-linked offer provides a "trigger" for the consumer to use his plastic card as a way to "power my mobile wallet," Burgess adds.