It's Alright To Be Little Bitty
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Last week, I met with one of the founders of Supportland, a hip, Portland OR-based start-up that is trying to level the playing field for small, local merchants by building a community-wide rewards program. Merchants pay a monthly fee, and the solution currently uses plastic cards (distributed by participating merchants) as a form factor -- however, sophisticated mobile capabilties are just around the corner. Although its initial focus is the rewards program, Supportland's real work is the building out of a local merchant network, combined with the development of an IT platform that can eventually be replicated/licensed with other local merchant communities in the U.S. (and abroad). In some ways, Supportland's approach reflects a growing trend in the payments products -- merchant-funded rewards. As the Card Act and the Durbin Ammendment negatively impact FIs' card portfolios, and as points programs are still wildly popular, merchant-funded reward solutions such as those offered by Cardlytics (and to some degree by BillShrink) are garnering lots of interest. The big differences here are that Supportland's solution isn't tied to payments, it's very small (currently 54 participating merchants), and its focus is squarely on local communities (i.e., not on nationwide retailers). This got me thinking -- is there a synergistic play with credit unions (CUs)? Like Supportland, credit unions are small and devoted to local communities, while at the same time they bring payment products (i.e., debit & credit cards) to the table. On the other hand, credit unions tell me all the time that they are eager to differentiate and grow a younger membership base -- something that a company like Supportland and mobile solutions could provide. Assuming this synergy exists, a few areas of opportunity come to mind:
- Embedding of community-based reward cards in CUs' mobile banking apps --similar to the Starbucks app supported by mFoundry
- Offering of bonus points when the reward card is used in conjunction with a CU's debit or credit card
- CUs taking on a role of marketing/issuing community-based reward cards to their membership
- CUs taking on a role of acquiring local merchant members for reward program participation