UK Merchant Test Loyalty First, Payment Might Follow

In launching a trial of a loyalty program, "Eat," an Ireland-based sandwich chain, is following the Starbucks model of focusing on loyalty as the driver of it mobile payment application, rather than "payments." In fact, the program will launch with a focus on loyalty rewards first, and later might be expanded to include purchasing functions.

New point-of-sale terminals capable of supporting RFID and the stickers, as well as Visa payWave and MasterCard PayPass payment systems, are being added as part of the trial. Eat is said to be the first merchant in the United Kingdom to introduce an integrated contactless POS system. The trial will start in May 2011.

Eat would issue stickers affixed to mobile devices that enable them to tap to receive points and redeem rewards. They could also view coupons and rewards, along with account details via a smartphone app on their phones.

The test uses RFID stickers rather than near field communications, likely for a couple very-practical reasons. The number of NFC-capable phones in current use is too small to support a viable test, much less a full-production commercial system. Also, by using the stickers, Eat does not have to worry about all the details of phone type, make and model. In principle, the phone becomes a vehicle for attaching the sticker, which could in principle, be affixed to a credit, debit or loyalty card as well.

The trade-off is between speed to market and ubiquity versus application features. The advantage is that anybody will be able to use the stickers. The disadvantage is that the system is relatively "dumb," providing only as much information as any other numerical identification number would, at the the time of transaction. The sticker approach cannot take advantage of a smart phone camera, location information, processing power, memory or other apps that might increase the range of features a payment or loyalty program might offer.

But stickers have one key advantage: they are easy to use, and anybody can use them, without regard for the type of phone in use. In fact, a sticker approach is not much different from using a plastic fob or card of some type to enter loyalty information for any other existing retail program. Again, it's a trade off: a simple approach available to every customer, right now, versus a more-complicated technology approach that is more powerful in terms of new features.

UK Merchant Plans to Launch Loyalty Trial with Stickers