Retailers Get Ready To Roll Out FDC’s New Loyalty Platform

With an eye on increasing customer traffic but also on lowering payment-card acceptance costs, several retailers are readying PIN-based loyalty programs built on processor First Data Corp.'s new ConnectPay platform that lets customers pay without presenting a card or writing a check. ConnectPay's pilot retailer is Quincy, Mass.-based Stop & Shop Supermarket Cos., which has about 385 stores in New England and the Mid-Atlantic states. Stop & Shop began testing the system about a year ago and is now rolling it out beyond the 32 stores where it currently is offered, says Tim Horton, vice president of product development in Greenwood Village, Colo.-based First Data's Commercial Services division. “One of the primary goals from the merchant perspective is to provide new ways to pay at the POS as well as to provide convenience to their customers,” says Horton. Stop & Shop, which brands its program PayVantage, did not return a [ital]Digital Transactions News[ital] call for comment. First Data also has contracts with a petroleum marketer and a pharmacy chain in its ConnectPay pipeline, but Horton refuses to identify them. The ConnectPay system can link general-purpose credit and debit cards, demand-deposit accounts, and private-label credit cards to a retailer's loyalty program. Customers can register at the point of sale, online at the retailer's Web site, through a toll-free number, or by filling out a take-one written application. After enrollment, the customer needs only to type in his PIN for payment; a card or checkbook isn't needed. “I really see a day when a consumer doesn't have to carry credit cards any more, or money itself,” says Lary Sinewitz, executive vice president at Hollywood, Fla.-based BrandsMart U.S.A., a consumer-electronics retailer with eight stores in South Florida and Georgia that is planning a ConnectPay-based loyalty program. On the back end, First Data will route card transactions to the appropriate network after the card number is confirmed, while transactions on registered DDAs will be checked against negative files of bounced checks. The system also performs velocity checks to assure that the amount of money to be withdrawn is within limits set by the depository institution, according to Horton. ConnectPay generates revenue for First Data through transaction fees charged to the retailer. BrandsMart's program, which Sinewitz expects will debut this summer, will put a different twist on ConnectPay. Customers will be able to enroll only a demand-deposit account or their BrandsMart private-label card issued by General Electric Co.'s GE Money unit. BrandsMart offers a 2% rebate on private-label card transactions, and that rebate will be available for cardholders registered with the loyalty program. “One of the problems we have with our private-label card is people don't carry it,” says Sinewitz. The rebate will not be available to customers who register a demand-deposit account. One of BrandsMart's big aims with the program is to divert traffic from general-purpose credit cards and their high interchange costs. “Interchange is a very nasty and dirty word to the guys who are trying to make a living on the bottom line,” Sinewitz said in April at NACHA?The Electronic Payments Association's Payments 2007 Conference in Chicago, where he was a panelist. “We're going to figure out a way to get out of MasterCard and Visa. It's only a matter of when.” In another loyalty-market development, Milwaukee-based processor Metavante Corp. today said it is expanding its Points2U rewards program beyond credit and debit cards to include electronic bill payments. Metavante's financial-institution clients will offer the program to their customers.