Visa Commerce Network: The "Uberization" of loyalty?

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By: RickFerguson |

Posted on February 2, 2016

It looks like Visa�s 2015 acquisition of alternative payment provider TrialPay is finally paying off, as Visa announces the launch of its first product leveraging the TrialPay platform: the Visa Commerce Network. Visa claims that the Network will provide a new way for merchants to �acquire new customers, drive loyalty, and increase sales with relevant offers.� The early pilot offers are intriguing�but what does the announcement mean for consumers, merchants, and the broader loyalty industry?

Built on the VisaNet electronic payment network, Visa Commerce Network can be utilized by merchants through application programming interfaces (APIs) to connect transactions between two merchants and provide their customers with offers, track engagement, and issue rewards. The Network recognises qualifying purchases at the point of sale and applies rewards to cardholder accounts without the need for coupons or loyalty cards.

Cardholders who give consent to be tracked by the system can accept, receive and redeem offers from participating partners by using their Visa cards directly or via a mobile device. Visa manages and tracks all offers on behalf of the merchants. Visa also promises �extensive analytics� support, with merchants receiving aggregated, near real-time reporting.

To date, more than a dozen businesses including Dunkin� Donuts, Regal Entertainment Group, Shake Shack and Uber have trialed Visa Commerce Network. In December 2015, Boston-based Uber riders received discounted Uber rides when they used their Visa card at their local Shake Shack. According to Visa, post-campaign results showed Shake Shack benefited from double-digit customer acquisition rates and higher spend, while Uber riders saw the discounts seamlessly credited to their Visa cards.

In addition to the Boston trial, Uber will soon expand its test of the Visa Commerce Network to 10 additional cities. Participating Uber customers who enroll in the promotion will automatically be entered to win an all-expense paid trip to San Francisco for Super Bowl 50.

The Bullet Point: For a quick take on what this announcement means to the loyalty industry, we sought comment from Bill Hanifin, president of Hanifin Loyalty and a founding member of the Customer Strategy Network (full disclosure: Customer Strategy Network is the owner of the Wise Marketer). Here�s the money quote from Bill:

�The announcement of the Visa Commerce Network is a significant step taken by global card companies to create direct links between merchants and cardholders. There are considerations for everyone in the loyalty value chain: issuers, acquirers, merchants and cardholders. Most intriguing is the potential for the dis-intermediation of loyalty providers as Visa enables merchant offers to consumers, apparently without help from the loyalty provider community.

"Industry observers I have spoken with have voiced a range of opinions about VCN. Some see it as the beginning of the "Uberization" of Customer Loyalty, reducing fragmentation and friction from customer loyalty. Others see it as just another type of promo as those offered by American Express over the past few years using Twitter and Foursquare as delivery channels.

"Execution will be a key to success and it will be important to watch how these offers work, especially customer experience and opt-in. Just who will help the merchants generate and measure offers is another challenge in this developing field."

We�ll have more on the Visa Commerce Network announcement in the next few days. Our biggest question: If Visa succeeds in driving acceptance and usage of the Network and competitors follow suit, will this mark the beginning of the �Uber-ization� of loyalty as the Network provides a way for merchants to issue rewards without the need for third-party loyalty platform providers? What does this announcement mean for the future of multi-partner coalition programmes? Stay tuned.

- Rick Ferguson

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