New Market Opportunities By Merging Loyalty and Payment

Abstract

Loyalty measures are a very old business practice that was limited to purchases of customers at a single merchant in the distant past. Later, specific service providers offered loyalty measures across several companies. Loyalty as a measure separate from payment, however, often requires an additional activity from the customer and—in case of physical sales—from point of sale staff. Large payment organizations like the credit card organizations and online payment providers like Amazon offer a certain extent of loyalty services and information. However, the information gathered and the information shared with merchants desiring enhanced loyalty features are in the hand of those large payment organizations, none of which can offer a high percentage of global coverage. We present the first projects aiming at merchant-driven loyalty-payment integration, and discuss the advantages for the merchants with a direct customer relationship. Those advantages include control over sales information, control over loyalty measure design, additional revenue streams, brand name cash-in, and competitive terms with payment providers. This creates the opportunity for disruptive changes in markets. These changes are driven by online, mobile and big data, but rather than favoring online heavyweights, the new model can benefit established brand names with high end customer acceptance and trust.