New, experimental consumer marketing programs have played a significant role in the way technology has upended the payment business in recent years. And Visa is looking to get in on the action.
The world's largest payment network is in the process of launching a merchant platform that will link consumer loyalty rewards to credit card authorizations. Its integrated redemption platform gives merchants the ability to deliver loyalty discounts at the point of sale without the need for a separate loyalty card; the discount simply shows up on the receipt.
"If you're like me, every time you go in you start a new card because you don't have it with you," said Michael Chall, Visa's senior director for global acquiring, in a panel discussion at the Northeast Acquirers Association conference on Jan. 21. "What you do have is a payment vehiclewhether it's a card, or your phone, or whatever the form factor."
The platform also provides information directly to merchants, so they can track the performance of their promotions, according to Chall.
To launch the new service, Visa is making a pitch to work with acquirers to tap into their merchant networks.
"We're working with the processors, we're working with ISOs, we're working with the acquirers, we're working with the bank sponsors to deliver these new solutions," Chall said.
It's the latest illustration of how the interlinked web of companies in the payments industry has been reshaped by digital technology.
Traditional card processors have faced pressure in recent years from rivals that provide add-on marketing services, in addition to transactions.
Square and LevelUp, for instance, have offer low-cost card processing and marketing, and have been steadily expanding their offerings to include services like small-business loans and consumer-facing customer support. The Dallas Cowboys also recently entered the market, providing processing services to merchants the team already works with in Oklahoma, Arkansas and Texas.
Though many companies are looking to differentiate themselves and stand out as unique, Visa's strategy is to make its integrated platform almost invisible.
"It's designed to be a commodity," said Rick Oglesby, an analyst at Double Diamond Group, in an interview at the NEAA conference. "One of the big values is that a single card holder with a single brand can use it anywhere in the world, and so it has to be the same anywhere in the world."
Companies like Square also sidestep independent sales organizations, but the new Visa program is designed to equip ISOs with a tool to fight back.
"From an ISO perspective, I'm not competing based on the lowest payment margin that I'm willing to accept, but instead I'm selling them a solution that says, 'Look, here's how you market to consumers, here's how you bring them in the door,'" said Oglesby.
It also illustrates one way that Visa is laying the groundwork for future shifts in digital payments. The platform utilizes the company's wealth of consumer purchasing data in a way that offers targeted offers based on the types transactions.
"It's not a competitive pressure" that's driving Visa into the merchant loyalty business, Oglesby said. "It's more forward-looking, and seeing that the future is coming."
Payments are currently dominated by face-to-face consumer transactions. But as mobile commerce spreads, merchants will demand digital channels to target consumers. And when that happens, Visa will have a marketing channel in place, Oglesby said.
"When you look at the pre-existing businesses that have a lot of infrastructure behind what they do, they need to be forward thinking, because it takes a long time to update their systems to handle this stuff," he said.