Oct 11, 2007

SPICED card technology helps payment schemes protect interchange fees

SPICED was designed to make payment scheme brands more attractive to merchants, so that merchants will encourage customers to use that brand over others, interchange fees become easier to justify, and the brand becomes more attractive to banks. What we’ve done is create a very simple and fast applet that offers a set of core promotional marketing features which appeal to merchants in all retail segments. The SPICED card applet supports a variety of promotions designed to help merchants attract and excite occasional customers, something useful and valuable for any merchant. A recent Deloitte study suggests that merchants are willing to pay 7-9% for a full payment service which attracts new and occasional customers and actually delivers sales (vs. 2% interchange for payment alone). This capability of SPICED is so powerful that it is the main message in a print ad that Welcome recently launched.

Here are several SPICED features that provide merchants a way to target occasional shoppers:
Competitive Shopper Messages/Coupons. Merchants can avoid losing customers to the competition by recognizing occasional customers that are probably shopping elsewhere and instantly offering an incentive on the next purchase. For example, a petrol retailer can recognize an infrequent customer that has not been to the chain in over 30 days, and instantly print an offer encouraging the customer to come back the next week. It is difficult and expensive for merchants to achieve a similar result using existing data mining and direct marketing techniques, whereas with SPICED, the feature is built into the payment transaction and the offer is simply printed at the bottom of the credit or debit card receipt. There is no need for merchants to operate a separate database, or integrate with bank systems, or use any other equipment other than traditional payment terminals. Merchants simply accept payment scheme brands with the SPICED applet built-in and ask their acquirer or terminal service provider to set up the campaigns of their choice.

Smart Sampling Offers. Merchants can encourage customers to try higher margin products and services by giving a different surprise sample at each visit.

Game Programs. Merchants can avoid the cost and trouble of complicated loyalty programmes and build continuity through games based on cumulative spending or number of visits.

SPICED also supports promotions designed to help merchants reward frequent shoppers:
Frequent Shopper Coupons. Merchants can avoid giving high value promotions to all customers by delivering their most valuable coupons after a certain number of visits or cumulative spending. For example, rather than offering a “Buy 1 meal and get 1 free” promotion to all customers, McDonald’s can give the offer only to customers that have eaten there 3 times in the last month, printed at the bottom of the customer’s normal credit or debit card receipt.

VIP Service Vouchers. Merchants can avoid loss of margins when offering high value services by identifying their best customers and surprising them with VIP treatment.

SPICED is part of Welcome’s XLS payment technology, so banks already using XLS can upgrade their POS terminals to accept payment scheme brands equipped with the SPICED applet and make their acquiring services even more valuable to merchants.


Roshan said...

Hi Aneace, I stumbled upon your blog and it seems that Welcome is doing some very interesting work in the whole Real Time PoS space. Are you guys present in India?

Aneace Haddad said...

Hi Roshan. Yes, we are present in India. You can contact Vikram Adige at Welcome. His e-mail address is v.adige@welcome-rt.com

Pauli said...

Hi Aneace, I love the idea of Spiced and congrats to signing a deal with visa.
It is my understanding that XLS only works in an EMV environment.
The payment card infrastructure in the US is ancient compared to other parts of the world and is still based on magnetic strip processing systems.
What do you see are the key factors driving the EMV and the smart card technology in the financial payments market in the U.S.?
How do you think value can be added to the traditional payment transaction in a magnetic strip processing environment?

Aneace Haddad said...

Hi Pauli. In the US, contactless payments are already beginning to take off. That technology is almost identical to EMV, as far as the chip is concerned. So a similar deal would work in the US to spice up Visa payWave or MasterCard PayPass. Also, we have deployed a magstripe version of our technology in India. This could be a good solution for the traditional non-contactless cards in the US.

pauli said...


Is there anybody form Welcome RT in the US I could connect to? I would like to learn more about opportunities to do card marketing in the US and see if there is something we could do together.

Aneace Haddad said...

Pauli, what's your e-mail address? It would be easier to communicate through e-mail. You can e-mail me at a.haddad@welcome-rt.com