Article

Paycloud brings mobile loyalty and gift-card tech to smaller retailers

The mobile marketing app lets consumers aggregate loyalty programs and special offers on their smartphones.

October 10, 2011 by James Bickers

Launched in July, the mobile loyalty and gift card app Paycloud aims to put high-tech marketing tools in the hands of small to mid-sized retailers. At launch it had partnerships with 55 merchants, and last month that number had grown to 3,000. The program has been limited to the Chicago area, but launches nationally Oct. 27.

"We provide merchants with a simple way to craft, deploy and manage their loyalty programs, and the single most effective way of reaching precisely targeted customers on the device that they are never without — their smartphone," said Doug Hardman, CEO of SparkBase, the company that makes Paycloud.

How it works and why it is different

There are more than a dozen apps in the iTunes App Store that will let users aggregate their loyalty cards and ditch the plastic, and there are countless others that use geolocation to push marketing offers to the phone. But Hardman says his company's offering is different, because it solves real-world consumer complaints about loyalty programs — too many cards, too inconvenient to sign up — while at the same time empowering smaller merchants.

Once users install the app on their phone, they can sign up for any participating retailer's loyalty program with a single click. Users receive push notification of any offers or rewards in their area, and can check their loyalty and gift card balances at any time. The app can also display a map, showing all Paycloud merchants in the surrounding area.

In the store, users load the app and wave it in front of a small receiver that integrates into the retailer's POS system. The app uses secure ultrasound tech, supplied by Zoosh, to transmit the needed information to the payment terminal — no NFC required since it uses the phone's built-in wireless radio.

According to Hardman, the cost to the retailer is around $40 for the hardware, plus an undisclosed monthly fee.

"From the merchant's perspective, the primary benefits are the elimination of the costs associated with maintaining and monitoring the plastic loyalty cards, and the ability to broadcast promotions and coupons directly to their most loyal customers' smartphones," Hardman said.

Paycloud operates on the SparkBase platform, which was founded in 2004 and provides white-label loyalty and gift card service to 130 ISOs, who resell the service to "a merchant community that numbers in the tens of thousands," a company spokesperson said.

An emphasis on smaller retailers

Since its launch, Paycloud has intentionally focused on small to medium-sized merchants. Hardman said the whole idea was to give those merchants tools equivalent to the technology enjoyed by Tier 1 retailers — and he claims that the underlying SparkBase platform has evolved to the point now where it has more sophisticated features than most of the programs used by those larger companies.

"As an entrepreneur, I empathize with the small merchant who is passionate about their business and wants to strengthen their relationships with their customers," he said.

One of those passionate merchants is Christine Ramsey, who owns the Lincoln Park Massage Spa. She said the concept of Paycloud fits her audience perfectly.

"Our young and hip clientele use their phones for everything," she said. "Being able to offer a rewards and loyalty program to them and send them other promotional opportunities makes so much more sense than the daily deal sites, which are a losing proposition."

Green Genes, an "eco-friendly boutique" that sells green clothing, books, toys and gifts, also is a Paycloud merchant. Owner Heather Muenstermann said the idea of a plastic-free loyalty program was an important part of their decision as it fits perfectly with their green brand.

"Even more appealing is the fact that we can track and follow consumer interest and spending, allowing us to establish a closer relationship with our customers by offering them incentives based on their previous purchases," she added.