Linking loyalty to payments via API, a U.K. fintech makes redemption instant

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Credit and debit cards, merchant apps and loyalty programs are being linked through a platform from U.K-based Fidel to provide real-time rewards, digital receipts and charity donations.

Linking shoppers' payment cards to loyalty schemes via an API can enable rewards to be spent instantly on a range of use cases such as purchases, cash back and charitable donations.

Fidel, a U.K.-based vendor, uses its open APIs to link merchant loyalty apps with real-time card data from Visa, Mastercard and American Express. Its technology can be used by coalition loyalty schemes operated by multiple retailers or airlines, by local merchants in a community, or by individual retailers who sell through digital and physical channels. Clients include British Airways (BA), the Avios airline coalition loyalty scheme, and buy-now-pay-later provider Klarna.

Fidel captures the transaction authorization messages when customers’ cards are used for purchases in bricks-and-mortar stores or on websites. These messages, which don’t typically appear on credit card statements, include the merchant’s ID, authorization code, merchant category code, the merchant’s complete name, and the geolocation of the transaction.

“Normally, we don’t see much detail on customers’ purchases, such as the grocery items they bought in supermarkets, since this information doesn’t flow through card networks,” said Fidel’s CEO Dev Subrata. “But our platform enables merchants to see the location, point in time, and amount of a purchase from the authorization code. By matching authorization codes to POS transaction data, merchants can see itemized purchase details for individual customers.”

Merchants can then mine this customer data to determine loyalty programs and product offers, subject to customer consent. However, merchants can only access data for transactions taking place in their own stores or, in the case of coalition loyalty schemes, for purchases taking place at participating businesses.

"Fidel is one of a handful of global players who have brought card-linking technology to market in North America. Its proven experience in other markets was a major factor in our partnering with Fidel," said Gabriel Woo, RBC Ventures’ vice president of consumer ventures.
"Fidel is one of a handful of global players who have brought card-linking technology to market in North America. Its proven experience in other markets was a major factor in our partnering with Fidel," said Gabriel Woo, RBC Ventures’ vice president of consumer ventures.

Subrata said that Fidel clients in the fast-food and coffee shop sectors are matching card authorization codes with transaction data in their POS devices to provide customers with digital receipts. “You swipe your card in the store, and before you leave, you have the itemized digital receipt delivered to you within the retailer’s app,” Subrata said.

Fidel is also working with Finland’s Receipt Hero, which supplies digital receipts to customers’ banking and accounting apps.

“Fidel allows us to skip multiple payment service provider integrations, which are costly and slow to implement,” said Chris Moore, Receipt Hero’s COO. “We can then focus on our POS and bank integrations, which widens our merchant network. In our current model, we work with PSPs to identify the customer at the cashier, and Fidel allows us to do this at scale across the major card schemes.”

In April 2019, U.K. and Spanish mall operator Intu used Fidel’s card-linking APIs to launch an in-store cashback loyalty app called Intu Pocket, replacing an earlier app which collected only a small amount of data about customers. Pocket can also be used for bonus offers by participating retailers in Intu’s 20 malls.

Between April and June 2019, following the launch of Pocket, the average Intu card-linked transaction amount increased by 47%, according to a case study on Fidel’s website.

When customers download Pocket, they are prompted to link their payment cards by scanning them into the app. When they visit an Intu mall and shop at participating retailers, they earn cash back, which they can withdraw after reaching the minimum threshold of £5.

“Card-linking enables us to consolidate lots of in-mall rewards,” Intu's commercial and digital director Trevor Pereira said in a statement. “It’s the most direct route for us to get our rent-paying clients’ offers into Intu mall visitors’ hands.”

Fidel handles the card networks’ commercial, legal, data governance and due diligence requirements on its clients’ behalf.

“We provide developers with a few lines of code so that they can connect in real time with the card networks,” said Subrata. “We do the integration and set-up for developers in an afternoon as opposed to the developer spending months creating connections to Visa, Mastercard and Amex, and paying six-figure fees to each network.”

Over 1,000 developers are building applications on top of Fidel’s APIs, according to Subrata. Among the use cases Fidel plans to support business expense data for transactions occurring on employees’ personal cards as well as their corporate cards, which is fed automatically into a firm’s accounting system and reimbursed. Its platform already enables online booking platforms such as restaurant reservation platforms to track and attribute customers’ spending which occurs offline from the platform after they arrive at a restaurant.

“Fidel is an interesting proposition that proves two points,” said Ron van Wezel, an Aite Group senior analyst. “Firstly, open finance use cases go beyond money management and payments, creating real value for FIs and merchants. Secondly, the card networks have done serious work to open up their platforms for API access.”

Fidel launched its card data-sharing API in the U.K. in January 2018. In Canada, Fidel has a partnership with RBC Ventures, Royal Bank of Canada’s technology innovation arm.

“The partnership centers on the card-linking capabilities that Fidel offers for a number of our ventures,” said Gabriel Woo, RBC Ventures’ vice president of consumer ventures. “Fidel is one of a handful of global players who have brought card-linking technology to market in North America. Its proven experience in other markets was a major factor in our partnering with Fidel.”

RBC took a minority stake in Fidel as part of its Series A $18 million funding round in September 2019, led by Nyca Ventures and QED Investors. The bank is using Fidel’s technology to power Dipp, a program giving credit card holders cash back for shopping at participating local merchants in Toronto. It is also using Fidel for Butter, a subscription management platform for services such as Netflix and Spotify. Both programs were developed by RBC Ventures.

Fidel is working with BA to enable BA passengers to connect all their cards, not just their BA co-branded credit cards, to the BA Executive Club scheme, which pays Avios points. Every time BA customers use their connected cards at affiliated online or brick-and-mortar merchants, they earn points. “When you buy a coffee at Caffè Nero, for example, you get a push notification from BA to say you have just earned Avios points,” said Subrata.

In the U.S., Fidel is working with small-business payment processor Beyond to support its Chip-In #ShopLocal program. This enables a percentage of the value of card purchases made at participating businesses by Chip-In users to be automatically donated to local causes.

In April 2020, Fidel partnered with U.K.-based charity marketing firm Thyngs to increase Gift Aid donations. Gift Aid provides tax relief on donations to U.K. charities. An estimated £560 million of Gift Aid goes unclaimed each year, due to the Gift Aid system’s complexity, the U.K. Government said in a report in 2018.

Thyngs, which works with 300 U.K. charities, adds NFC chips to charitable fund-raising collecting boxes to turn them into cashless and contactless donation terminals.

By integrating with Fidel’s API, Thyngs automates the Gift Aid claims process for donors who consent to their card data being linked. When consumers make card transactions qualifying for Gift Aid, they are automatically notified in real time and can approve the donation. The charity then receives the donation instantly.

Correction
This story has been updated to correct the title of Chris Moore and clarify that the Fidel expense management capability is not yet live.
September 15, 2020 2:31 PM EDT
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Fintech APIs Loyalty and rewards Real-time payments U.K.
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