Credit card companies set to expand smartVisa rollout

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Several more credit card issuers are expected to introduce versions of Visa U.S.A.'s smartVisa card during the first half of 2001, based on the response from consumers after three months.

Introduced by three top issuers last September, the smartVisa card provides new security features for online shopping, but a key feature is loyalty marketing technology provided by Detroit-based Catuity. So far, no loyalty marketing programs harnessing smartVisa have been announced yet, but Visa confirms it is in talks with several marketers who are exploring possibilities for smartVisa-driven nationwide promotions as early as this year.

Billed as an industry first, Visa says its smartVisa allows up to 37 different slots for credit card issuers or merchants to reward consumers for specific behavior on a real-time basis. This would give instant discounts or reward points to people who respond to offers at the point of sale for both online and off-line purchases.

MasterCard lags behind Visa in rolling out a smart-card product in the U.S., although it provides smart cards outside the U.S., and American Express introduced its "Blue" chip-enabled credit card in 1999, offering its users enhanced security for online shopping.

But AmEx's smart-card technology is useful only to Internet users so far. The smartVisa card's benefits, on the other hand, can be harnessed for both online and offline shopping-something merchants have been waiting for, according to Patrick Gauthier, senior VP of smart-card application and market development for Visa U.S.A. AmEx's loyalty program for its Blue card, BlueLoot, rewards users for usage-online or offline-but does not harness its computer chip. Visa has been promoting the smartVisa card since last September when First USA, FleetBoston Financial Group and Providian Financial Corp. introduced unique versions of the card, backed by a network TV spot from Visa via BBDO, New York. MasterCard is expected to introduce a smart-card product in the U.S. later this year.

Visa and its smartVisa card issuers won't discuss specific numbers, but they say consumer response to the card has been very positive. "We've had great response from consumers, and now we're talking to our affinity partners about marketing deals using the loyalty function, and many are interested," said a First USA spokesman.

Catuity says the smartVisa product is the industry's first real-time rewards program, because transaction activity is housed on the card itself, not on a computer network.


"Usually rewards programs happen at the back end, requiring a lot of back-and-forth transferring of data," said Mike Howe, Catuity's CEO. "Our technology is the first to let retailers signal a consumer at the point of sale about an opportunity to get a discount or points bonus instantly, based on that day's promotion, and let them get that reward or discount immediately."

Each smartVisa card comes with a reader that attaches to a consumer's computer, facilitating online purchases and updated promotion information that can be used for online or off-line purchases.

A good example would be a supermarket chain that would 'rent' one of the 37 slots on the smartVisa card, and customers would get rewarded for hitting specific total-transaction targets when they check out. A manufacturer like Kellogg Co.'s cereal could also do a loyalty deal, through the supermarket or on its own, that would replace a paper coupon. The data is stored on the card, which provides an elegant system for keeping track of individual consumer activity, and is a total departure for the way loyalty programs are currently handled," Mr. Gauthier said.

Copyright January 2001, Crain Communications Inc.

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