Merchants may have to rely on independent sales organizations and agents to help them make the best use of technology-based loyalty schemes.

First, business owners have to see the value of loyalty programs that go beyond a paper-based punch card to take advantage of mobile technology, says Stephen Williams, managing director of SFW Enterprises LLC, which does business as Rafter J Merchant Services.

Many businesses in the San Angelo, Texas, area where Williams is based don't know about the benefits of collecting customers' information when enrolling them in loyalty programs. From car washes to yogurt shops, he finds many loyalty programs that fail to collect even basic information such as email addresses.

"There's an awful lot of small-business owners that really are not aware of all the various things that they can do to build their business," he says. "You have to educate the merchant."

That educational task sometimes can prove daunting, given the gossamer nature of loyalty programs.

"What you're selling is a concept, not something they can hold and touch and feel," says Williams.

Still, Williams sees offering loyalty schemes as a way ISOs can differentiate themselves and become partners with their merchant customers. He recommends ISOs emphasize their loyalty offerings instead of card-processing services when approaching prospective clients.

Doing so can help ISOs get appointments with clients who already may have been contacted by other firms offering them transaction services, Williams says.

Jared Hackler, executive sales director of Echo Daily, an ISO based in Gardnerville, Nev., agrees. Loyalty comes as an afterthought for many ISOs when they could use it to attract business, he says.

Businesses with one to 30 employees seldom use loyalty programs, which are extremely underappreciated, Hackler says.

Almost every large, Fortune 1,000 company has some sort of loyalty program, Hackler says. "That should say to these small- and medium-sized businesses that these programs work," he says.

ISOs have an incentive to increase their merchant customers' businesses, and offering loyalty programs provides a natural way to do that, Williams says.

"It's no longer just selling credit cards and debit cards and setting people up," he says. "What you're really trying to do is educate a customer and help them build the business."

Another hurdle arises with persuading merchants to switch to phone-based programs, says Hackler.

Echo Daily has developed its own mobile application-based loyalty program that it offers to its customers.

There's always resistance to change, and that reluctance shows up with ease-of-enrollment issues for mobile-based loyalty programs, he says.

Merchants often are more accustomed to handing customers loyalty cards than instructing them to download applications on their phones, Hackler says.

"But if you look at the big picture, is this person really going to keep your loyalty card in their wallet when everything else is going on their phones?" he says. "Ultimately consumers will look at you when you try to hand them a card and say, 'what, why aren't you up to date with what everyone else is doing?'"

Yet another hurdle is the lack of universality and ubiquity of mobile payment applications.

"With all the loyalty programs and the wallets that are out there right now, they're all unique," says Donna Embry, senior vice president of strategic development at Payment Alliance International Inc. of Louisville, Ky. "There's no ubiquity, and until there is ubiquity, it will not be a mass market product."

The more consumers have to worry about where their loyalty cards or mobile wallets will work, the less likely they'll be to use them, Embry says, suggesting a super-network will have to emerge for wide adoption.

"I don't want to have to enroll in a thousand different things and keep up with them," she says. Instead, Embry would prefer one place where she, as a consumer, could go. And the company that gives her more ubiquity is going to be the one she ultimately chooses.

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