First Data is providing the technology that underpins Foursquare's recent enhancements to its deals service, which allows credit and debit card holders to link their accounts to Foursquare's social network.
Foursquare's service allows consumers to compete with friends by earning points by "checking in" to merchants while on the move. Its deals service enables consumers to receive special offers from merchants.
"As consumers walk around with smart devices that help them shop smarter, there's a wide array of mobile apps that allow them to do that," says Dom Morea, senior vice president of advanced solutions and innovation at First Data. "It's not about consumers shopping on the Web or in the digital space. It's about what happens as these worlds converge."
By linking their payment card to their Foursquare account, users can redeem a special offer sent by Foursquare by swiping their credit or debit card at checkout as usual. Foursquare is extending this program offer to include credit and debit cards from MasterCard and Visa in addition to American Express cards.
The challenge in the digital coupon space is bridging the gap between the mobile device and the point of sale. In this case, the plastic card is still used, but First Data is leveraging a layer of tech that connects the consumer, merchant and Foursquare—routing consumer and payment information among the parties.
"The offer is 'in the cloud' waiting for you…First Data sees that the transaction is happening when a consumer redeems the special offer," Morea says.
First Data's loyalty tech engine is called OfferWise, which was developed by First Data and CardSpring—a company that offers an application programming interface (API) to build coupons, and loyalty programs. First Data uses CardSpring's API to build and sell loyalty programs to merchants, issuers or third parties like Foursquare.
CardSpring is designed to work minimal deployment of hardware of heavy programming on the publisher's end. It uses Java among other programming languages, as well as Web services to allow publishers to develop and deploy applications quickly.
"We want to make the payment network be as programmable as the web," says Eckart Walther, CEO of CardSpring.
At the point of sale, First Data delivers a notification to Foursquare that the consumer has redeemed the deal. First Data then applies the discount for the transaction to the consumer's card account, and the merchant adjusts its settlement.
"There's no active role for the card networks themselves, the users are encouraged to use the cards more, which is good for the networks," Morea says, adding the availability of a wider range of cards is a way to improver user experience. Foursquare also has a direct partnership with American Express, whereas its work with Visa and MasterCard is driven by First Data.
Supporting more cards makes things "easy for the consumer, because they don't have to figure out if they have to use a certain card to redeem a loyally program," Morea says.
Other OfferWise users include Shark Media, an Austin, Texas-based company that's using the technology to sell rewards on its online couponing website, RetailMeNot. Other users include Bank of America Merchant Services, which provides OfferWise to merchants through 2Go Media's iDeals marketing platform.
Cardlytics also offers digital coupons, and companies such as Loylogic are attempting to boost point of sale rewards redemption by giving consumers more options as to how the rewards can be used.