Chockstone Bought Peppercoin for Card-Linked Loyalty Offerings

Chockstone Inc., a provider of customer loyalty marketing programs and stored-value solutions acquired Peppercoin Inc. for its card-processing and transaction-aggregation expertise, Chockstone’s top executive tells Digital Transactions News.

The acquisition of Peppercoin, which will be merged into Chockstone, will allow the loyalty-marketing company to expand its offerings, says Jeff Lipp, Chockstone chief executive. Chockstone offers loyalty and rewards programs tied to a loyalty card, a dual gift or loyalty card, or a phone number.

“Peppercoin was a little further in the market using the credit or debit card as the loyalty identifier at the point of sale,” Lipp says. “It is a good add-on to the type of programs we’re running in the restaurant industry today.” Peppercoin is a “perfect fit” with Chockstone because both companies have developed systems for the real-time delivery of rewards at the point of sale, Lipp says. “For us, the value of the processing is to extract the data so we can build customer profiles on an individual basis and work with our clients to deliver targeted offers,” he says.

Peppercoin’s platform provides real-time reporting and customer-analytics tools that enable merchants to deliver targeted offers when the customer uses a debit or credit card at the point of sale. The Peppercoin acquisition will enable Chockstone to go back to its existing clients “with a few extra bells and whistles to further strengthen their programs and give them even better tools to effectively use their gift and loyalty programs to drive profits,” Lipp says.

Chockstone is especially interested in Peppercoin’s aggregation technology that enables merchants to cut processing costs by bundling small-ticket transactions, Lipp says. Peppercoin’s core technology relies on a proprietary mathematical technique in which algorithms select representative small transactions to stand in for streams of payments to reduce interchange and other transaction costs.

More than 30,000 retail locations worldwide use Portland, Ore.-based Chockstone’s loyalty marketing, gift card and payment product worldwide. Clients include Subway, Ticketmaster and Plaid Pantry Stores.

Chockstone has made no decisions on which Peppercoin executives, including chief executive Mark Friedman, will remain with the company. Friedman, a former Lucent Technologies Inc. executive, took over at Peppercoin in December 2004, less than a year after the company rolled out its first commercial processing service.

Waltham, Mass.-based Peppercoin started out processing micropayments online for digital content, but soon shifted into small payments for physical goods ranging from parking fees to ice cream. Terms of the deal, which was announed this week, were not disclosed.