Merchant-funded rewards provider fisoc hopes the communal element of Facebook mixed with special card offers can drive repeat payments volume for small merchants focused on their local communities.

"Local merchants don't have the tech to do a closed loop gift card system," says Jay Valanju, CEO of fisoc, "so we provide that capability for them."

Through a debit rewards program called Buzz Points, fisoc attempts to increase payments by combining offers with Facebook content that the company curates on behalf of local card issuers.

"In January this year we saw an increase in sales every day compared to last year," says Kathy Kalvaitis, the owner of the Dollar Store Plus near Madison, Wis. "General business usually goes down in January, but the payments program allowed it to actually increase this year."

The store began participating in Buzz Points late last year, when Kalvaitis noticed it was being offered through Fort Credit Union in Fort Atkinson, Wis.

The store has used Facebook for general marketing. The added publicity via social media has helped drive business for both her store and her daughter's nearby tanning salon, which also participates in the program. "My daughter is noticing new business, and is getting people who would normally not have gone there," Kalvaitis says.

To use Buzz Points, consumers make payments at participating local merchants with a debit card, while earning points. They can redeem the points for gift cards from that merchant or receive perks from other participating merchants—either online, via a mobile app or in person. Consumers who post their rewards on Twitter and Facebook earn extra points. Merchants pay a monthly fee to participate, as well as extra fees based on points consumers earn through debit payments. 

For card-issuing financial institutions, the company sets up and manages a Facebook page that can be accessed by merchants and consumers. By liking their card issuer's fisoc-managed Facebook page, consumers they can see a list of local participating merchants, as well as discuss those merchants with friends, and download special payment offers and coupons—creating a network Valanju refers to as an "ecosystem."

A consumer who goes to a particular coffee shop ten times may get 100 points, for example. Card use is tracked by fisoc, and consumers who log into the card issuer's website or Facebook page can view a statement detailing how many points they have, as well as information on redemption.

Broader uses of Facebook, such as fan pages for merchants, are also available. "Consumers can comment back and forth about a particular shop, for example," Valanju says.

Fisoc is currently in about two dozen markets nationally, and also uses some old-school branding. The company's staff put stickers on the windows of participating merchants, and digital versions of these stickers can be used on social media. The company recently received a $5 million cash infusion and signed up a handful of new card issuers.

Using closed-loop payment offers to build local merchant communities has been tried before—without success. Bling Nation, which targeted local issuers and merchants with contactless stickers, halted the service after its partners resisted adopting an attached loyalty program called FanConnect.

The maturation of social media changes this business model. Local merchants can access Facebook to track card payments. Rewards and redemptions can also be monitored, as can consumer sentiment—an ability beyond local radio or newspaper ads or coupons. 

"Social media is another channel though which consumers can engage on a regular basis," says Rod Witmond, senior vice president of talent management and international expansion for Cardlytics. "It's a channel that, through payment-related special offers, can help consumers generate revenue for themselves."

Cardlytics just linked its analytics and marketing platform to Facebook. American Express is also using social networks to support payments—as are payment companies such as Dwolla, Chirpify and Vantage Credit Union.

With social media, "you can figure out that certain customers may respond to a certain type of offer. It helps the merchant understand who is responding to a reward offer," says Chris Harter, senior vice president of sales for Cardlytics.

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