Meet Foursquare's Newest Competitor: Visa

Mobile Offering With Retailer Gap Lets Credit-Card Giant Test the Mobile Deal-Making Waters

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Visa has unveiled a new mobile service for retailers that brings the credit-card giant head-to-head with mobile deals players such as Foursquare, Groupon and, now, eBay.

So far, Visa has tested a pilot with the Gap, where the retailer's customers can sign up to receive text-message offers based on spending habits or when or where they swipe their Visa.

Here's how it works: You're out to lunch and pay with your Visa card. That transaction triggers a deal, because you are already enrolled in a Gap program online with your Visa card and phone number. And because you have opted in and fit the parameters of the deal, you then receive a text message that could say: "50% off a regular-price item for the next four hours."

Retailers or merchants can send deals through Visa within a number of parameters. Texts can only go out to card holders who complete a transaction within a certain ZIP code, and during a certain time of day or week. Retailers can target only consumers with certain spending habits, like those who tend to spend more on travel or apparel. Merchants can also send out a deal directly after a certain type purchase. Use your Visa to fill up at a gas station? A fast feeder hawking breakfast could send you a text for free coffee.

For Visa, the new service is one more way to grab revenue from merchants. The Gap promotion comes at an additional cost to merchants' existing transaction fees, but Leigh Amaro, senior business leader for Visa's global information products, declined to provide specifics. "This is part of our larger service that really delivers more value to merchants," she said. "Visa's global processing network can reach potential customers when they're out shopping with tailored deals on this real-time messaging service."

After all, retailers have already begun to test campaigns with text-message marketing firms and the startups that popularized the mobile, local deal.

Foursquare launched a partnership with American Express that tied mobile behavior to transactions at the South by Southwest Interactive Festival this March. AmEx customers could link to their cards to their Foursquare accounts to receive discounts automatically loaded on the card when checking in and making purchases at Austin locales. The 2-year-old check-in startup has more than 8 million users and has pioneered the location-based deal in mobile. Before AmEx, Foursquare check-ins often served up nearby discounts or freebies for local businesses.

Daily deals leader Groupon, too, has been making moves to port its email-based offers to mobile. It recently launched Groupon Now to serve mobile deals for immediate use, rather than its usual deals that can last for several months. This week, Groupon acquired Pelago, the creator of location-based service Whrrl, which is also a Foursquare competitor.

Even e-commerce giant eBay is making strides toward mobile deals. On Wednesday, it acquired location-based service Where, which also sends out deals based on the user's location.

The Gap promotion has been under way since last year's "Black Friday," as the day after Thanksgiving is known in the retail world; the retailer did not provide specifics on the program. Visa has no other partners to announce, even though the service has been under way for months. It does, however, have 1.8 billion card holders straight out of the gate and data on real-life spending habits, something no other current service can claim.

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