Card-linked offers, a concept commonly seen as a lure to attract consumers to use mobile wallets, is growing in popularity with plain old plastic.

"People are coming to us, and we have more than 400 developers building applications on the CardSpring platform," says Eckart Walther, CEO of the payments infrastructure provider CardSpring.

"We'll be looking for as many third-party developers as possible to incorporate the technology," says Walther, who prefers the term "card-linked services" instead of offers because "services open payments networks to new capabilities with other applications that are much broader."

A partnership with terminal maker VeriFone Systems Inc., announced last week, represents an early advancement in card-linked technology and demonstrates how consumers may find it appealing to view their cards as more than a payment tool. The partnership allows shoppers to redeem digital coupons by swiping their cards at merchants that use VeriFone's PayWare Connect gateway.

"VeriFone's gateway and industry-standard [application programming interfaces] can enable new experiences in real time," says Harry Hargens, VeriFone's director of PayWare business development and channel programs.

The consumer receives a reward immediately, as opposed to traditional card-based offers where rewards are applied on a month-end statement, Hargens says.
Every time a CardSpring merchant performs a card-based transaction, the VeriFone gateway queries CardSpring in real time through a standard application interface to see if the consumer's card carries any applicable offer for that purchase, Hargens says.

VeriFone's gateway passes the dollar amount and a token representing the card to CardSpring. "For security reasons, the actual card number is not exchanged," he adds.

On a $10 transaction, CardSpring may respond that a $2 discount applies. VeriFone then sends an authorization request for the $8 balance to the shop's Visa/MasterCard processor, Hargens says. The approval goes back to the shop's point of sale terminal, along with a marketing message from CardSpring that will appear on the receipt, informing the consumer of the reward redemption.

The VeriFone partnership comes only two months after CardSpring revealed its technology was part of processor First Data's cloud-based OfferWise loyalty program, which allows the FourSquare social network to send digital coupons linked to consumers' payment cards.

Even though the consumer swipes a plastic card to initiate a coupon offer, the consumer's payment account is the delivery mechanism, says Richard Crone, chief executive of San Carlos, Calif.-based payments consulting firm Crone Consulting LLC.

As such, what used to be a paper-coupon redemption process becomes a digital process that allows whoever activates the offers to possess more information about the consumer, Crone adds.

"A natural extension for card-linked services is to provide the consumer a shopping list with a set of promotions that populate that list," Crone says.

Mobile wallet developers will be interested to see where they fit in at the card-linked services table, especially because consumers' top use of a retailer application is to download coupons, Crone says.

Brian Riley, senior research director and analyst with Needham, Mass.-based CEB TowerGroup, sees some potential problems with educating consumers about the process.

"Card-linked services may be a solution looking for a problem," Riley says.

The technology will provide some consumer benefits and it will likely receive some adoption, but consumers will want to understand the security process if multiple accounts can operate through their plastic cards, Riley says. "Despite the 'cool' factor, you have to ask what we are trying to do with this?"

Ultimately, the consumer wants to know if a new technology "makes it easier to transact," Riley says.

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