Loyalty & Rewards

Man In The Middleware

If offering a superb user experience is what keeps loyal consumers coming back, why do most loyalty programs today fail to deliver that engagement? James Anderson, Group Executive of Platforms, Emerging Payments at MasterCard, sat down with MPD CEO Karen Webster to share why MasterCard has focused on creating the middleware spec that will enable a seamless payments/loyalty experience for both consumers and merchants.

While making payments digital, connected and frictionless has been a high priority for innovators and merchants alike, the loyalty programs connected to those payments have somewhat fallen to the digital wayside, with many merchants still supporting paper-based initiatives that aren’t easily integrated into a digital format.

MasterCard’s announcement today is hoping to change that.

With the support of a number of industry stakeholders, MasterCard will unveil its vision to bring a more unified, seamless checkout experience to loyalty programs both in-store and in-app. The goal, according to Anderson, is to ensure digital payments are taking place in a more compelling and bigger way for the consumers.

How they plan to do that is interesting. Instead of another “loyalty solution,” MasterCard has created a loyalty middleware specification that will make it easier for those seamless connections between payment, promotions and loyalty redemptions to happen via mobile applications in their favorite stores. In what Anderson describes as a “win-win-win” scenario, customers can select loyalty coupons/promotion and make payments in a single or double tap at a contactless terminal.

Anderson describes this approach as the most efficient way to overcome the inconsistent experiences that consumers have today when shopping and trying to also leverage loyalty memberships, offers and/or promotions. In many cases, he contends, consumers are forced to fumble or search for their physical loyalty keychain, coupon or plastic card. Even if the loyalty rewards are loaded on a mobile phone, consumers are still required to search for and find the app, introducing friction (and adding time) into what should be a quick and easy checkout.

Anderson said the best way to avoid this “clunky” consumer experience is to take what merchants are already doing – accepting payments and offering loyalty – and let the middleware do all of the hard work of enabling a single, coordinated user experience that improves the process for both consumers and merchants.

“Consumers want it and merchants are willing to deliver the value to the consumers in terms of the programs, this is just a better way of executing behaviors that are already underway with consumers and just putting into an orchestrated and predictable experience," Anderson stated.

While the concept of supporting loyalty initiatives across all channels and devices is something that would ideally become an industry mainstay, building out any major change in the merchant point of sale environment comes with its own unique set of challenges.

As Anderson explained, devising a standard that is designed to work with different loyalty schemes, different point of sale terminals and systems, and different payment methods is no easy task.

Which is why MasterCard is focused on building out collaborative partnerships through the industry to help deliver and scale that connectivity for the benefit of consumers and merchants. As part of MasterCard’s contribution to industry thought leadership, Anderson noted that the focus is on working with the right set of partners to help build out the program at a bigger scale.

“Our opportunity to drive this forward is to start with a proper robust specification and then get the ecosystem of people to support that specification, so that we have methods that are predictable, reliable, interoperable and therefore can scale up over time,” Anderson said.

“Another chapter is beginning and it's the chapter that says digital payments needs to live in a bigger consumer context and we are providing the framework for that bigger consumer context and bigger consumer experience beyond just 'tap and pay,'” he added.



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.