Social Networking Moves to the POS, Bringing with It New Interest in Deals

Marketing via social-network tools, long thought to be a feature primarily of e-commerce, is rapidly moving to the physical point of sale as merchants seek new ways to generate sales and independent sales organizations look for ways to differentiate themselves. This move to the point of sale, meanwhile, has been facilitated by the proliferation of handsets and has brought with it a revival of interest in targeted rewards and offers for consumers.

“Social media for customer-acquisition is rapidly increasing,” said Peggy Olson, founder and principal at Strategic Marketing, a payments consultancy, during a session on social networks at the Electronic Transactions Association’s annual trade show this week in San Diego. The ETA is a trade organization for ISOs, which resell payment processing on behalf of banks and processors.

Indeed, as speakers at the show made plain, many payments resellers are finding that marketing—particularly mobile marketing—ranks higher in importance with merchant prospects than payment capability. “Payments will follow,” Doug Dwyre, president of mobile-payments firm Mocapay, said during a separate session. “It’s a value add on top of the marketing capability.”

“We’ve had agents say, ‘We don’t lead with payments any more,’” Pal Flagg, chief operating officer at Street Savings, an Orange, Calif.-based provider of mobile-based point-of-sale rewards and offers technology, tells Digital Transactions News. Street Savings markets its service through ISOs. While the 5-year-old company won’t disclose how many merchants are using its service, Flagg says Street Savings is now working with 150 agents in 23 states, up from around 40 in a “handful” of states a year ago.

The popularity of handsets, particularly smart phones, has made location-based social-media marketing a high-priority item for merchants, ISOs say. For example, Zumogo, a mobile-payments system created by ProPay Inc., a Lehi, Utah-based ISO, will offer a beefed-up social-marketing capability when its latest version is released in three to four weeks, ProPay executives say. Restaurants, bookstores, and other merchants using Zumogo will be able to text customers when bands or authors popular with those users are appearing for concerts or for book signings, for example.

ProPay expects to have 150,000 merchants enabled for Zumogo by the summer. That’s about half the company’s portfolio of active merchants. Chris Mark, executive vice president of emerging markets at ProPay, says the company will also work with “channel partners,” including other gateways, to sign up merchants outside its portfolio.

Indeed, the surge of interest in social-media marketing and offers technology has attracted the attention of some of the industry’s biggest players. VeriFone Systems Inc., the dominant supplier of payment terminals, this week launched a platform called Paymedia that lets processors create digital-coupon, gift card, and other loyalty programs for merchants.

And earlier this year, Bling Nation, a mobile-payments processor that relies on contactless stickers applied to consumers’ mobile phones, introduced FanConnect, a non-payments service that allows users to “check in” with friends on Facebook when they tap their phones at merchants’ Bling Nation readers. The service lets merchants offer Bling users rewards and to extend those rewards to users’ Facebook friends.

In other examples of how merchants are applying to the point of sale lessons learned in the online world, some are offering discounts to customers who agree to “like” the merchants on Facebook or post their products on their wall, according to Scott Goldthwaite, senior vice president of product management and marketing at Planet Payment Inc., a payments gateway. Such tactics yield valuable word-of-mouth advertising but also help merchants become better acquainted with customers. “These tools give merchants the ability to interact with customers at a much deeper level,” Goldthwaite told the audience at the ETA show’s social-network session.