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Loyalty Rewards Engine for UPside Visa Prepaid Cards
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Loyalty Rewards Engine for UPside Visa Prepaid Cards

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Overview covering the Loyalty Rewards Engine available with the UPside Visa Prepaid Cards. Explains how the system can be programmed, what arethe funding options, and provides an example of how it can …

Overview covering the Loyalty Rewards Engine available with the UPside Visa Prepaid Cards. Explains how the system can be programmed, what arethe funding options, and provides an example of how it can be used on conjunction with an existing digital currency system.

Published in: Economy & Finance

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  • 1. © Copyright Plastyc Inc. 2008-2010 UPside Visa Cards Loyalty Engine Overview UPside Visa prepaid cards are fitted with a Loyalty Purse, i.e. the ability to keep a balance of “Points” separate from the monetary balance. The Loyalty Purse is invisible from the Visa network, and is managed privately between Plastyc and Sponsor Partners who want to use it in relationship with their own affinity program or private digital currency. Sponsoring Partners are typically online merchants and/or online communities who operate affinity programs using their own loyalty points, promotional codes, e-certificates, or proprietary digital currency. It is a great way for them to improve consumer loyalty beyond their own website and services. For issuers of a private digital currency it is an additional funding source to increase the total volume of digital currency in circulation. Cardholders have access to both the Points balance and the monetary balance of their cards when they log into the online card dashboard, or when they use the Facebook UPside Card application. Redemption of Points is an easy process available directly from the cardholder’s UPside online account. Loyalty Engine Parameters The behavior of the Loyalty Purse is programmable in 2 major ways: - Earning Card Points: o Events that trigger the earning of points: Upon card activation, if decided by the Sponsor Upon card activation and card funding of a friend having received a recommendation Upon card funding, for the teen cards with yearly fee only Upon online purchases made through the UPside Mall • By the cardholder with his/her card • By the parent of a teenage cardholder with any payment means at parent’s disposal Upon card purchases made at designated shops defined by the Sponsor. Important Note: awarding a points for purchases at designated merchants requires that those merchants be recognizable through either their Visa/MC-assigned Merchant Category Code (“MCC”) or through the store alphanumeric discretionary string assigned to them by their acquirer or Payment Service Provider, as communicated via the 8583 ISO protocol. o The rate at which points are awarded for each type of triggering event above can also be programmed © Copyright Plastyc Inc 2006-2010 Page 1
  • 2. © Copyright Plastyc Inc. 2008-2010 - Redeeming Card Points: o The type of rewards that the Card Points can be redeemed against Partner-specific certificates, promo codes, points or digital currencies Cash credited back to the card balance o The exchange rate, i.e. the amount of rewards obtained for a given amount of Card Points There are no specific “redemption events”: redemption is available at any time to cardholders as long as they have enough Points to redeem. Defining a threshold of Card Points necessary for redemption is customary in all loyalty programs and is quite important in order to limit the number of redemptions to a manageable frequency and also create an additional incentive for users to “get to the next level”. It is also possible for a Sponsoring Partner to “force” a redemption event at its website by making its points or digital currency directly available to cardholders inside their card statements upon specific events like at the time of card activation. The configuration parameters above can be linked to specific families of cards: - cards sponsored by a specific Sponsoring Partner, i.e. all the cards that were enrolled into coming from the website of a particular Partner or using a particular enrollment promotion code assigned to a Partner; - cards belonging to a particular UPside sub-program, or a subset of sub-programs; (see later in this document for current card sub-programs) Economics The financial support for the Loyalty system, i.e. the money available to fund the Points and rewards against which Points may be redeemed is shared between: - Plastyc, which can use 3 types of funding sources: o Its cardholder acquisition budget, i.e. the money Plastyc is prepared to pay for acquiring a new cardholder, part of which can be used to give an incentive to the cardholder, while the other part is typically used to give an incentive to an advertising or co-marketing partner. Points funded out of the acquisition budget are available upon card activation; o The consumer fees obtained during normal card operations, for those cards that do have sufficient fees in their schedule to help fund the loyalty program (see below for an explanation on different card sub-programs). Loyalty Points funded out of card operations are available immediately after the relevant operations (such as loading funds in the card); o Affiliate marketing commissions obtained from partnership Plastyc establishes from time to time with merchants towards which it drives sales by referring its cardholders to such merchants. Currently, Plastyc operates the UPside Mall with 200+ affiliate merchants. Points funded out of affiliate marketing commissions are typically available at the end of each month, after commissions have been received by Plastyc; © Copyright Plastyc Inc 2006-2010 Page 2
  • 3. © Copyright Plastyc Inc. 2008-2010 - The Co-Marketing / Sponsoring Partner providing the redemption items, which can subsidize the rewards in two ways: o The ratio of perceived consumer value to actual cost of the reward: for example a merchant providing digital rewards, such as mobile phone ring- tones, video game levels or bundles of a proprietary digital currency, can make those rewards appear as being worth $X while their cost of issuance and distribution is $X/N o A volume discount rate that can be applied when bulks of rewards are made available to the loyalty program Funder How are points subsidized? Amount Share of Activation Commission paid to Driven by partner Cardholder Sponsoring Partner, to be agreed with Partner Acquisition Driven by other Share of “ambassador” fee paid to referring cardholders cardholder. Plastyc Edge sub-plan: 1% of funds Card Operations Other plans-: N/A Between 2% and 10% of money spent at any Affiliate Marketing of the 200+ merchants in the UPside Mall Perceived Value to Actual Cost Ratio 1/N, depends on type of rewards Sponsor Bulk Discount Determined by Partner © Copyright Plastyc Inc 2006-2010 Page 3
  • 4. © Copyright Plastyc Inc. 2008-2010 Example of Loyalty Points Scheme A hypothetical online community or marketplace has a loyalty program based on “Pointz” (a fictitious name) with a non-discounted face value of 100 Pointz = $1 The Sponsor typically awards Pointz to its users for certain activities, or/and sells the Pointz in bulks, in the normal course of its business, irrespective of UPside Visa cards e.g.: $10 = 1,000 Pointz, $20 = 2,200 Pointz, $40 = 4,500 Pointz, etc… The online community or marketplace becomes a co-marketing Sponsor of UPside Visa cards, and links its Pointz system to the UPside Visa loyalty engine in the following way: - Dedicates $2 of the Activation Commission it receives from Plastyc for each new cardholder to awards 250 Pointz to the first 1,000 new cardholders (by having made Pointz to Plastyc at the bulk discounted rate of $3,000 for 400,000 Pointz) - Makes Pointz available to Plastyc for redemption to cardholders at its standard rate schedule ranging from $1 for 100 Pointz to $40 for 4,500 Pointz, which corresponds respectively to 100 Card Points for 100 Pointz and 4,000 Card Points for 4,500 Pointz. This arrangement results in a typical cardholder earning Pointz as follows: - activates the card upon arrival in the mail: 250 Pointz - refers 2 friends successfully: 1,000 UPside Card Points worth 1,250 Pointz - purchases $100 worth products via the UPside Mall: between 200 and 1,000 UPside Card points exchangeable against 200 to 1,250 Pointz In addition, if the cardholder has chosen an UPside Edge card (suitable for teenagers), he/she would earn 1,000 UPside Card Points exchangeable against 1,250 Pointz for each $100 loaded in the card. © Copyright Plastyc Inc 2006-2010 Page 4
  • 5. © Copyright Plastyc Inc. 2008-2010 Summary of UPside Card Plans UPside Cards are currently offered with a choice of 4 different plans, named Edge, Access, Clear and Life. Each plan comes with a different set of features and fees in order to address the different needs of consumers. For youth with parental supervision For young adults UPside Plan “Edge” “Access” “Clear” Yearly Month-to- Free “Life Plan” plan month plan Plan Parental Allowance X X X Funding Friends (IOU’s) X X X X Salary deposits X X X X Occasional adult funder X Retail & online shops X X X X Spending ATM cash withdrawals X X X $29.95 $1.99 waived when Activation / Maintenance Fees $2.99 monthly None $400 are circulated yearly monthly Earned upon activation (if funded by sponsor out of X X X X activation commission) Loyalty Points Earned for funds loading X (funded by Plastyc) Earned for referring friends X X X X (funded by Plastyc) Earned for purchases at UPside Mall X X X X (funded by Plastyc) © Copyright Plastyc Inc 2006-2010 Page 5
  • 6. © Copyright Plastyc Inc. 2008-2010 Awarding points to a Cardholder without using the Loyalty Engine It is also possible for the Sponsor of a card to award points to cardholders without making use of the UPside cards’ loyalty engine. For example, a Sponsoring Partner may want to encourage card usage, in particular for purchases made at its own stores, by awarding points proportional to such purchases, irrespective of the type of card plans used by the cardholders. To this effect, Plastyc offers a Card Transactions Summary Report, i.e. a file in XML format detailing the aggregate amounts in dollars of purchases made with sponsored cards. For a given time period specified by a start and an end date, the Card Transactions Summary Report provides: - the aggregate amount of purchases made by each sponsored card in general - the aggregate amount of purchases made by each sponsored card at the Sponsor’s websites of stores For the distinction between purchases made in general versus purchases made at the Sponsor’s shop(s) to be possible, the Sponsor must have specified to Plastyc: - the Merchant Identification (“MID”) code used by the Sponsor’s acquirer to identify its transactions, - or a Transaction Description alpha-numeric string that is inserted in payment card transactions for that same purpose Whether an MID code of a Transaction Description code is used to filter out Sponsors’ transactions needs to be discussed between the Sponsor and Plastyc. A detailed description of the Card Transactions Summary Report XML format is available as a separate technical documentation. By way of example, a Sponsor can decide to retrieve the Card Transactions Summary Report every week from Plastyc, and: - award X points per $ spent outside of its stores - award 2X points per $ spent inside its own stores The award of such points to cardholders needs to be handled directly by the Sponsor, and such points will not appear in the Loyalty Purse of the card. Typically, a Sponsor with an online store would increment the point balance of its customers directly inside their respective accounts as a result of the card transactions activities. © Copyright Plastyc Inc 2006-2010 Page 6