Innovative marketing could help offset credit card fees

Posted on August 01, 2007

I’ve been having a conversation with Aneace Haddad, founder of Welcome Real-time about some of the innovations in next generation payment products like contactless payments and EMV (a technology that facilitates communication between a point of sale device and a consumers credit card). Aneace’s company specializes in this.

The new technologies being developed like EMV will facilitate communication between a credit card and a point of sale device. So instead of your credit card issuer just capturing information that you spent $20 at Target, it could capture products purchased. That data could be maintained in aggregate and provide a much more relevant picture of your buying habits and preferences. It’s granular data that would piece together all of the other information that your credit card issuer already has on you. Some retailers are already doing this with their own programs such as Chicago based grocery retailer Dominicks with their Fresh Value Card.

With that data, the idea is that as you’re purchasing something from a retailer, the chip in your credit card would communicate with the point of sale device and use your buying history to determine what relevant and targeted things to offer you. Merchants would benefit from this as the revenue they would generate by offering this would offset some of the credit card processing fees they pay on the transaction.

Aneace shared a number of ideas regarding how these innovations may be prove useful to both consumers and merchants:

“Another angle we are exploring is something similar to roaming. When you go to another country with your GSM phone, you usually receive one or two SMS messages from your operator telling you which local operator to switch to for the best service. Why not have something similar when you use your card in a new country? The first time you pay, the receipt could include a roaming message from your bank telling you which bank’s ATM’s are free, or offering you special traveler’s insurance and a local number to call. You don’t want those messages popping up over and over again; the intelligence built into the new payment devices ensures that the message is only delivered once.Imagine for a moment that MasterCard PayPass cards are widely available across the US. Or if you prefer, look at Europe, and imagine that merchants already have a large number of customers using Visa Vpay debit cards, which all have chips. I’ve talked a lot about how a merchant can leverage data hidden within those card products to deliver targeted promotions. What else might happen in addition to targeted promotions?”