By Jeffrey Green (@epaymentsguy)
Convenience store and petroleum station operators soon may add a mobile rewards and automated clearinghouse payment system supported by merchant-branded decoupled debit cards. Merchant processor National Payment Card Association (NPCA) has revealed it will begin offering the smartphone-based solution this fall by tying its mobile-payment service with VeriFone’s Smart Fuel Controller.
The service, which will be available for beta testing in November, will enable the more than 1,000 merchants that support the VeriFone system to use their existing payment-acceptance infrastructure to accept mobile payments. It also will provide them with a relatively low-cost means to support rewards programs while enabling them to secure valuable customer information, including email addresses and transaction data.
NPCA specializes in offering decoupled debit cards to access cardholders’ checking accounts using the magnetic ink character recognition information from a personal check supplied when customers register online. Consumers then may tie the merchant-branded debit card to the participating merchant’s own mobile app. Merchants also may apply their brand to a mobile app supplied by the processor.
“Many consumers today would rather utilize the capabilities of their smartphones versus pulling out their wallets,” Danilo Portal, National Payment Card’s chief operating officer, said in an October 14 press release.
Participating merchants will pay the processor 18 cents per transaction and a one-time payment of 84 cents per consumer upon enrollment. One of the first users of the system was Cumberland Farms of Framingham, Massachusetts, where about 30 percent of transactions flowing through the processor are mobile-based, reports Digital Transactions.
Indeed, Cumberland Farms’ experience in offering an NPCA-based mobile app should provide others with a good look at how such products can work.
The Cumberland Farms Experience
To encourage use of its free SmartPay Check-Link service, launched earlier this year, Cumberland Farms, which operates some 600 locations, provides customers who use the card or mobile app an instant 10-cent discount on every gallon of gas they purchase. Customers see the savings on the screen of their Apple iPhone of Google Android smartphone when fueling, and the price on the pump automatically notes the discounted amount.
Participating merchants fund the discount from savings associated with not having to pay card-network interchange. National Payment Card settles its transactions with merchants daily. To bolster security, customers must enter a four-digit personal identification number (PIN) for each transaction. New customers also go through an account-validation process that could take up to three business days to complete. Customers are notified when approved via email.
How The App Works
When paying, customers open the SmartPay app and select whether to pay at the pump or in the store. When paying at the pump, the app uses the phone’s geolocation service to verify location. The user confirms the identified location and enters the pump number. The app then prompts the customer for a receipt and displays the transaction details on the screen. In store, the clerk scans a bar code the app generates on the phone, and the customer enters a PIN to complete the transaction.
Cumberland Farms also provides customers the option to fund their SmartPay account via PayPal. But, when using that option, customers may tie the PayPal account only to the mobile app, and they do not receive the 10-cent discount on gas purchases. They also may use the PayPal option only when paying at the pump and not for in-store purchases.
Because Cumberland Farms requires a $100 authorization for each gas purchase, PayPal customers showing an account balance below that amount are asked to choose another payment option to cover the difference. The retailer releases the difference between the $100 authorization hold and the purchase price once the transaction is complete.
Chief Goal: More Customers
Merchant-funded discounts have become increasingly popular as retailers seek ways to drive more consumers to their stores. Not having to pay interchange is one way to fund the discounts and drive customer loyalty, and tying transactions to mobile devices can help simplify the integrated payment and instant-rewards process.