Fiserv Inc. is adding a host of mobile tools to its UChoose Rewards bankcard loyalty program, starting with a mobile app that lets customers redeem their rewards points on the spot in stores.

Consumers who sign up for UChoose through a bank may use the smartphone app to scan bar codes on products in stores. This lets them determine whether the products are eligible for redemption through the loyalty program.

Brookfield, Wis.-based Fiserv plans more upgrades for the app this year.

Up next is a feature that harnesses phones' GPS technology to locate the nearest store offering eligible rewards merchandise and special merchant promotions to earn more loyalty points, Holly Krest, Fiserv's senior vice president of loyalty solutions, said in an interview.

Fiserv also is hatching a plan to add a "Groupon-like" deals feature to its UChoose Rewards program over the next several months that consumers can manage through the mobile app, Krest says.

"Letting consumers track, manage and redeem their card rewards on their handheld device will add an important new dimension that we think will boost overall program usage," she says.

As card loyalty apps go mobile, merchants may become more enthusiastic about participating in banks' merchant-funded loyalty programs, Dennis Moroney, a research director with CEB TowerGroup, said in an interview.

"Mobile loyalty apps benefit all parties because they're easier for consumers to see where they can get the most use out of programs when they're shopping, but they also empower merchants, who gain a more direct connection to the consumer," he says.

Users may download the new UChoose mobile app from Google Play for use on Android devices and through Apple Inc.'s iTunes for iPhones and iPads.

Consumers typically opt to have the items they choose to redeem shipped to them, regardless of whether they scout the merchandise through the UChoose Rewards online catalog or use their mobile device, Krest says.

Fiserv added the in-store merchandise pick-up option early this year and only at Best Buy. UChoose customers may use their mobile app at Best Buy locations to first determine which items are eligible, then redeem and claim the merchandise immediately in the store if the item is available.

So far the in-store pick-up option is getting a positive response, Krest says.

About 40% of UChoose customers redeeming items online through Best Buy are opting to pick the merchandise up immediately, Krest says.

Because Best Buy customers are opting to pick up all types of items, from large televisions to DVDs, "it seems that when people decide to redeem their credit and debit card loyalty points for something, many of them want to get the item right now," she says.

Since launching UChoose Rewards in 2009, Fiserv has signed up more than 14,000 merchants to participate. Moreover, some 450 banks have adopted it, helping to bring in about 2 million consumers altogether, Krest says.

The majority of banks offering the program tie it to debit card purchases, but more are adding credit cards so participants can earn points when they use either type of card, she says.

Last year, cardholders enrolled in UChoose used their payment cards 50% more than did those not registered, generating $52 more in annual incremental revenue per cardholder, Fiserv announced earlier this year.

UChoose provides banks with the same merchandise offerings across the board for customer rewards, but each institution may set its own standards for point accumulation, Krest says.

Fiserv charges participating banks a per-account fee that varies based on each program's size and scope, she says. Banks may choose from a merchant-funded, issuer-funded or blended model, and they also can decide whether their consumers can redeem points in cash as well as in merchandise, she adds.

The growing array of mobile shopping and loyalty options presents intriguing opportunities and challenges for banks, Moroney says. Chief among them is the need for banks to differentiate their mobile offerings from competitors', he says.

"Consumers will soon have a lot of choices in different mobile apps for loyalty, digital wallets and just tracking their spending, and while it creates opportunities it will also put pressure on banks to keep their own brands at the forefront to hold onto consumers," Moroney says.

Subscribe Now

Authoritative analysis and perspective for every segment of the payments industry

14-Day Free Trial

Authoritative analysis and perspective for every segment of the industry