How FinTechs Enable Split-Tender Transactions With Loyalty Points

Loyalty button keypad

FinTech firms are keeping a pulse on how merchants retain their customers — and how they can help them with those strategies through technology. One of the ways organizations such as airlines keep customers returning, Modo CPO Ryan Lee told PYMNTS in an interview, is through a robust loyalty program. However, making loyalty a currency or allowing it to be a method of tender, he said, “is quite complicated.” He is a frequent traveler on one airline, and he can’t spend a portion of his points on anything. It’s an all-or-nothing deal, he says.

When he tries to use his points, they prescribe how much he can spend. They say he has to use 25,000 points to fly a given segment, and a round trip is, say, 50,000 points in total. As a user, however, he would love to spend 10,000 points and pay the rest in cash. But because of the way those systems were set up — designed in the 1970s — they don’t have that capability. FinTechs such as Modo, however, aim to help those types of organizations. “We’re enabling the ability to handle these split-tender transactions,” much like a credit card, a gift card, or any other method that looks and feels like something their current payment systems can handle, Lee said.

Modo has a /Checkout product, and within that offering, it has Modal, which is a hosted payments widget that goes on the merchant’s website. And, through that product, the company is allowing a user to select the number of points through a slider that they want to use in a split-tender transaction. If a customer has 1 million points, they can use the slider to say they want to use only 250,000 points and pay the rest through, say, cash. The solution, in essence, lets users choose a variable amount of points to leverage — or in this case, burn — some of their loyalty currency.

With the help of loyalty technology, FinTech firms such as Modo are providing merchants with a plug and play way to offer split-tender transactions. As a result, customers can pay for purchases with a combination of points and cash through innovations in payments.


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More than 63 percent of merchant service providers (MSPs) want to overhaul their core payment processing systems so they can up their value-added services (VAS) game. It’s tough, though, since many of these systems date back to the pre-digital era. In the January 2020 Optimizing Merchant Services Playbook, PYMNTS unpacks what 200 MSPs say is key to delivering the VAS agenda that is critical to their success.