Mobile devices are rescuing consumers from the drudgery of old merchant-funded rewards programs that required users to sit at home and sift through their online banking statements to find deals.
This trend has been a boon for Cardlytics, a merchant-funded rewards provider, which says more than half of the deals consumers choose now come from the mobile channel.
The improved process through mobile devices is likely one reason JPMorgan Chase & Co. has become the latest big bank to sign on to Cardlytics’ rewards program, joining Bank of America, which has been a longtime partner through its BankAmerica Rewards program. Wells Fargo & Co. also is piloting Cardlytics’ services, the Atlanta-based merchant rewards company said.
Cardlytics and Chase are still working out details of the program Chase will roll out to consumers after finalizing a deal this week, said Lynne Laube, Cardlytics’ chief operating officer.
“We don’t typically disclose the details of exactly how banks used Cardlytics’ platform, but getting Chase signed is a major milestone,” she said.
Cardlytics has more than 2,000 U.S. financial institutions using its platform through direct integrations and also through third-party partnerships. It works with Fiserv and has worked with Mastercard to reach banks, and last year raised $12 million in a new funding round from existing investors, bringing the company's total funding to about $200 million since its launch ten years ago.
Cardlytics works with advertisers to craft deals—a typical example is 10% off on purchases at a major retailer like Macy’s—and its platform sorts offers customized to users based on their behavior, according to Laube. Merchants fund the deals directly, and Cardlytics takes a cut for its own revenue.
“Our offers may be placed equally across all of a bank’s products, tailored to how customers spend money, so people may get multiple offers,” Laube said.
Users click on offers that interest them, and when they make the purchase, the deal’s cash value appears within their bank account. Offers are presented through the online banking channel, the mobile app and in emails, according to Cardlytics.
The overall click rate of Cardlytics deals with participating banks is around 7%, which is at least 10 times the rate of most online offers, Laube said.
Cardlytics also streamlined the opt-out process, so consumers can more easily block notifications of deals. “The rate of bank customers who turn off deals is less than half a percent, which proves people aren’t opting out much,” said Scott Grimes, Cardlytics’ CEO.
Cardlytics’ data suggests consumers check their mobile banking app nearly every day, or 23 times a month, compared with visiting their online banking portal about 10 times a month.
Cardlytics on Thursday said its revenue for the first quarter ended March 31 was $32.7 million, up 22% over the same period a year earlier.