Visa is launching its own version of the location-based discount, in a move that rivals Facebook Places Deals, Foursquare and other mobile social networks hoping to capitalize on a shopper's physical presence in order to offer them bargains. But in Visa's case, no "checkin" is required. In fact, neither is a smartphone.
Instead, the credit card company is experimenting with SMS text messages containing offers which are sent users who opt-in to the new program. In its initial phase, clothing retailer The Gap is Visa's only partner. Discounts are sent to consumers in predefined zip codes and demographics after qualifying transactions are made with their Visa cards.
While location-based social networking services like Facebook encourage smartphone users to launch an app on their phone and perform a checkin, Visa has chosen to leverage its own real-time payment processing network instead. When a customer is out shopping and makes a purchase using his or her Visa card, that transaction is immediately processed and analyzed to determine if it matches the criteria necessary in order for a discount to be sent out. If so, that offer is sent back to the customer's phone via an SMS text message.
The offer, in this case, would be for a deal at a nearby Gap location. If, in the future, more retailers signed up to participate, the offers could include deals from other qualifying merchants, too. At present, however, Visa has not detailed any expansion plans for the service.
The current program, called Gap Mobile 4 U, lets the retailer provide incentives to potential customers but also benefits banks by letting them offer value-added services customized to their customers, explains Jim McCarthy, Visa's Global Head of Products.
Gap's program has been in testing since November 2010, when early users signed up to receive offers from the Gap via a secure website, says Visa. The offers were then delivered to phones when the shopper met certain criteria, such as shopping at a merchant within a specified zip code, shopping at a specific merchant category type or spending a certain amount on a specific day or within a specific time frame.
To redeem these text-based coupons, customers only have to show their phone to an employee at The Gap during checkout.
Both Visa and The Gap are notable for having experimented in the deals spaces for some time. Most memorably, perhaps, was the time when The Gap gave away 10,000 pairs of free jeans to its customers in conjunction with Facebook's Deals launch back in November. Visa has also been experimenting with NFC alongside its banking partners Chase, Wells Fargo, U.S. Bank and Bank of America. NFC, or near field communication, is a short range wireless technology that allows customers to pay for purchases using only their mobile phones. It forms the backbone for the emerging mobile wallet systems, which will one day include coupons and discounts, in addition to processing transactions.