Taggo Launches Web 2.5 Membership Card Aggregator and Storefront

Platform-as-a-service model allows card solution providers to play a greater role in helping retailers market their cards with very little capital expenditure (CAPEX)


Taggo Pte Ltd, a membership card aggregator and storefront, today announced the availability of Taggo’s Web 2.5 platform-as-a-service model for companies which develop loyalty, prepaid, membership, access control and other similar systems dependent on the use of plastic cards.

Taggo’s platform-as-a-service model allows these companies to offer retailers and other organizations the ability to add their card programs to the Taggo storefront, with little or no capital expenditure on the setup and maintenance of servers, databases, storage and networks. Customers can join these programs through a simple SMS text message or by browsing the my-Taggo website (www.my-taggo.com) and tap their phones at the point of sale to enjoy the same benefits as presenting a plastic card, reducing the fat wallet epidemic.

“Companies that offer card solutions are searching for ways to help their retailer customers expand membership and usage, a problem that has grown bigger as people have become tired of carrying cards for every conceivable purpose,” said Aneace Haddad, founder and CEO of Taggo. “The Taggo Web 2.5 platform-as-a-service model allows for these providers to offer an elegant solution with almost no capital costs.”

The loyalty card market is an example of where Taggo can benefit developers, retailers and their customers. U.S. loyalty programs now count 1.3 billion individual memberships, more than four times the total U.S. population. Over 60 percent of these memberships are inactive. And it is becoming harder to enroll new members - average annual membership growth in the U.S. fell from 30% in 2000 to under 6% in 2006 (source: Colloquy). People can’t be bothered filling out yet another form for yet another card that will be left at home, unused.

In Singapore, 86% of retailers feel that the main reason people don’t use their cards more often is that they leave them at home, and 60% feel that the main reason customers don’t join programs is that they have too many cards already (source: Taggo). To attract people that don’t want more cards, 65% of retailers offer sign-up discounts, 60% offer free memberships. Surveys also reveal that virtually all retailers that offer loyalty or prepaid cards want to enroll more customers and increase card usage (93% of respondents).

“The results of these surveys provided us key elements for our value proposition,” said Aneace. “We are confident that our patented technology provides a powerful and simple solution for card issuing organizations, at a cost vastly lower than other mobile tap and go solutions that the industry is exploring.”

Taggo’s patent-pending technology works with all mobile phones and carriers, and is marketed through Value Added Resellers (VARs) that provide membership, customer management, loyalty, gift, prepaid and access card products and services. Taggo's first VARs currently serve retailers across the region, in Singapore, India, Indonesia, Malaysia, the Philippines, Australia, New Zealand and other countries.

VARs benefit in several ways when they integrate to Taggo’s Web 2.5 platform:

• VARs can play a bigger role in helping their customers market their cards to their own customers.



• VARs earn a portion of revenue streams that are charged to retailers when new members sign up for a retailer’s membership program.



• VARs can expand their target market by offering their systems and services to the large number of retailers and other organizations that have not been able to justify issuing plastic cards.

About Taggo

Taggo is a card aggregator and storefront that provides a convenient and affordable way to use a mobile phone to replace plastic membership, loyalty, prepaid and access cards. Customers no longer need to carry as many cards in their wallets, and can join new programs with a simple text message, without the hassle of filling out forms. Retailers can sign up new customers easier, at lower cost, and can achieve higher usage than with plastic cards that tend to be left at home. Taggo’s patent-pending technology works with all mobile phones and carriers. Leading providers of loyalty, membership, gift, prepaid and access card solutions market Taggo to retailers and other organizations as a feature of their products and services. Visit http://www.my-taggo.com for more information.

For more information, please contact:
Aaron Koh
+65 9489 4557
aaron@my-taggo.com

Singapore retailers slow to offer customers the option of paying with contactless cards

This morning, a Straits Time article (see Smart cards not used) describes how many retailers don't see what they would get out of accepting contactless cards.

I have written about this profusely, as early as this morning (see McDonald's swipe to pay - same benefits as contactless, but for all cards).

My blog has a large number of similar entries under the contactless tag.

McDonald's swipe to pay - same benefits as contactless, but for all cards

I paid with my Visa credit card at a McDonald's restaurant in Singapore. With a single swipe, and no signature, the transaction was pretty much as fast as it would have been with a contactless card. How can the contactless tap and go value proposition hold up if you can get the same benefits with traditional magstripe cards that customers already have in their wallets?

Speaking at an MBA Entrepreneurship Bootcamp

This weekend, my friend Cliff Go invited me to speak to a group of MBA students at an INSEAD Entrepreneurship Bootcamp event. I spoke earlier this year at another INSEAD event and also at an SMU event, all here in Singapore, but this one was very different. This time, I spent an hour sharing what I learned in my last startup venture (Welcome Real-time, a provider of credit card loyalty software to banks) and how I am applying that learning to my new venture (Taggo, a tap and go platform for providers of loyalty, prepaid, membership and access card systems and services). Here are the topics I spoke about.

1 - Rolling snowballs

Companies are like snowballs being rolled down a hill: once they’ve been pointed in a direction, it’s really hard to change course. My prior venture was launched in France in 1996 and was acquired in 2007. Where I found it very difficult to change course was … What I want to do better this time is …

2 - So what? Who cares? Why us?

The three toughest questions. Are you doing something important? Who is it important for? Are you selling vitamins, aspirin, or crack? To whom? What if pain is not obvious? Complicated ROI calculations ... Rainmakers and Sales divas ... Why us? Domain knowledge. Experience with similar venture, funding, execution, exit. IP experience and reputation. What are the barriers to entry? Patents, and VAR channel strategies.

3 - What percentage of your company are you willing to give away?

Not the right question - try working backwards: early stage investors want to get 5/7/10x ROI and don't like owning more than 25-30%. What exit valuation needed to achieve that? Credible? “Built to last” versus “Built to flip” … Balance. Who are the target buyers for Taggo? Marketing companies, payment service providers ... Why should companies buy if they can license or partner instead? Who are your target investors? Angels, VCs, strategic investors?

4 - The team

How angels make investment decision: Mgmt team (30% of decision), Size of market (25%), Product/service (10%). Have always managed to attract people passionate about what we were doing because … The type of people that I have had the most trouble finding are … Your larger team … rolling snowballs should be fun.

3 Myths About Credit Card Fees for Businesses

I was interviewed for an article by Matthew Bandyk that was published in US News & World Report. I was asked several questions on interchange.

Q: What about the argument that limiting interchange fees will lead to credit card companies offering fewer rewards and benefits? What about the business side? Are they only benefits for merchants if Congress were to limit interchange fees? Any potential drawbacks? I've read a little about the example of Australia. What kind of regulations did they enact there, and what were the effects? I've also read a little on your blog about how interchange fees affect different kinds of businesses differently--can you give an example?

A: Credit card companies finance their points, miles and other rewards primarily out of interchange fees. Everybody knows that gold and platinum credit cards give more rewards, but very few people know that these cards generate higher interchange fees for merchants to pay. The rewards are financed directly out of those interchange fees. Cutting interchange fees will cause banks to give less rewards, or to find other ways to finance those rewards.

In other countries, whenever interchange fees were cut, there was little evidence that merchants passed the savings on to their customers. The benefits of lower interchange benefit merchants directly, immediately, by lowering their cost of doing business. Theoretically, the lower costs will eventually find their way into the prices that shoppers pay, but that could take a long time. Look at how fast gas pump prices go up when oil is expensive, and how long it takes for prices to come back down after oil goes back down.

In Australia, there were essentially two decisions made to help limit interchange fees. First, the fees were forced to be cut by around half. Second, merchants were given the right to surcharge for the use of credit cards. The result was that credit card companies cut their rewards programs and many merchants began surcharging.

Interchange does not react to competitive forces in the same was as other types of fees. Interchange fees are set by Visa, MasterCard and other card schemes as a feature of each card product that the scheme offers to banks. When a bank is deciding between a Visa or MasterCard logo on their cards, and between one company's platinum card and the other's, it is very tempting to choose the one that provides the highest interchange fees. This competition is what has driven interchange fees higher over the years. Merchants are not part of that negotiation process of course, yet they are the ones that pay the fees. This is where the animosity comes from.

The question is whether merchants receive more benefits from higher interchange cards, like gold and platinum cards, than from standard credit cards. If they do receive more benefits, then they should pay the higher cost of accepting these cards. But today, merchants have no choice to say whether or not they get more benefit and whether or not they will pay more. They must simply accept all cards at the fees defined by the payment schemes, with no recourse other than to no longer accept cards at all.

The payment brands should be competing to provide the best services to merchants to justify their higher interchange fees. This is not happening. And capping or cutting interchange fees will not cause this to happen. However, the threat of surcharging will cause that innovation to finally happen.

Q: When you say surcharging, in the context of Australia, does that mean merchants paying a flat fee for the use of credit cards, as opposed to a fee based on the number of exchanges? What do you mean by "best services"? What's an example of how they could innovate if given the incentive? When you say threat of surcharge, do you mean threat of regulation requiring or allowing surcharges, or something else?

A: Surcharging is the practice of charging customers a fee when they choose to use a credit card. The fee is typically an additional 5% on the cost of the purchase. This is also very common here in Singapore and other parts of Asia, as well as some parts of Europe. In the UK for example, all travel agencies charge customers a 10% surcharge.

Payment brands create lots of new features for their cards, with a focus on customers. Things like guarantees and other features. If there is an incentive to focus on merchants, the payment brands will innovate and create new features and services that make cards more useful and attractive to merchants. This is happening already to a certain extent with marketing services, where merchants can have targeted messages delivered to customers based on their card usage profile, a service that American Express originally offered, and which is now also offered by other brands. Much more work should be happening in this area.

By threat of surcharges, I mean that if a major retailer threatens to begin charging customers a fee for using a specific brand or card type - for example Visa Platinum cards - then there would be strong pressure and incentive for the payment brand to negotiate with the merchant and perhaps promise additional added value in exchange for not surcharging.

Q: Aren't retailers typically prohibited via their agreements with credit card issuers from charging more for customers who use cards?

Yes, yes, that's the problem, that's why merchants are fighting. The credit card schemes prohibit merchants from surcharging. Merchants have challenged that prohibition in many countries, including the US. it's the ability for card issuers to prohibit surcharging that the Australian authorities abolished. They and other governments have found that the credit card issuers abuse their power through those types of prohibitions. It actually started a few years ago in the US when Walmart and other retailers won a major lawsuit that abolished another similar barrier, something called the "honor all cards rule" which required merchants to accept all Visa or MasterCard cards, and not just debit cards for example.

Tap & go gives senior citizens more time to get across roads

Elderly pedestrians get more time to cross roads in Singapore when they tap their senior citizen mass transit cards at specially equipped cross walks. This is a novel use of NFC contactless technology that should help get creative juices flowing for all kinds of potential applications.

See a press article here and here.