Card processor and merchant acquirer Clearent is working with Reward4Schools to help the Missouri-based community rewards provider reach a national audience.
"Our cards will work at any business across the U.S. that Clearent puts us on. I may be in Florida making a purchase at a participating business, and that payment will go back to the school of my choosing in Missouri," says Sonny Gartin, founder of Reward4Schools, which is based in Springfield.
The Reward4Schools community card is a private-network card, similar to a reward card that a consumer would get form a local business, Gartin says.
Reward4School's merchants donate a portion of each payment to area schools of the consumer's choosing. The cost to the merchant is the donation plus a processing fee of 5%. The total cost can vary based on the size of the donation, which can range from 2% to 10%. The total cost to merchants is usually about 10%, with half going to the schools, Gartin says.
The receipt details the payment and school donation. Reward4Schools bills merchants at the end of each month, using an internally-built electronic tracking system.
Clearent will purchase reward packages from Reward4Schools. By partnering with Clearent, Reward4Schools will dramatically add to the number of businesses that participate in the program, Gartin says.
Reward4Schools currently works with about 100 businesses and 150 schools, Gartin says.
"As you can imagine, having 200 agents [through Clearent] selling this will expand it greatly. There's no way to put a finger on it, but it could be tens of thousands of new merchants," he says.
The benefit for the merchant is the goodwill that comes with participating in a school fundraising program, Gartin says. The same card works at all participating merchants, he says.
"The unichannel approach to [store rewards cards] will be a thing of the past," says Nick Holland, a senior payments analyst at Javelin Strategy & Research. "You will see systems like [Clearent and Reward4Schools], or you will see it through a digital wallet that can act as an aggregator for coupons and rewards."
Clearent, which processes about $4 billion in annual card volume, plans to use the partnership with Reward4Schools as a sales tool for its representatives, who can tout school fundraising and marketing when approaching merchants.
"The challenge is the standard pitch of [independent sales organizations], which is 'I can save you money,'" says Jeff Zimmerman, vice president of product management and marketing for Clearent, which sells to merchants through ISOs and agents. "They are looking for new talking points to speak with merchants, and this allows them to talk about how to connect with the community."
Merchants can accept the cards without an upgrade to their point of sale hardware, Zimmerman says.
Another prominent multi-merchant loyalty program is Nectar's in the United Kingdom, says Zil Bareisis, a senior analyst for Celent. Nectar supports Sainsbury's for groceries, BP for gas and Denbenhams for department store payments.
Other multi-merchant programs include Marqeta, which in May added its technology to Facebook's prepaid card. Marqeta rewards consumers who commit to paying in advance at merchants.
"What I find interesting about this [Clearent and Reward4Schools] program is that the benefits are not necessarily going directly to the consumers, but instead to schools and charities, engaging the entire community," Bareisis says. "As the beneficiaries such as schools promote the program, this helps drive traffic to participating merchants."