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Visa has entered the loyalty and rewards space with the launch of the Visa Commerce Network, which allows merchant partners to deliver targeted promotions and rewards to Visa cardholder customers. This kind of proposition is not new in itself – several third parties offer platforms of this kind. What makes the Visa Commerce Network one to watch is its potential for significant scale, given that it is based on connecting transactions between merchants on the huge VisaNet payments network. The Visa Commerce Network also promises to remove the friction from the rewards redemption process, which continues to be a sticking point for consumers and blunts the ability of these applications to act as a pull for payments.

Removing the friction from rewards

Integrating rewards with payments is appealing to merchants because it can help drive consumers to participating stores or venues (online and physical) where the reward is redeemed against a transaction. This process also generates valuable new data insights on consumer behavior. There is particular interest in rewards in the context of mobile payments, where the prospect of a promotion can, in theory, incentivize consumers to try mobile payments or use them more. The problem is that the redemption process in general can be so cumbersome that it has the opposite effect to that intended. It is easy enough to push out offers but the redemption side is typically neglected, involving forming filling, multiple clicks, and other steps that clutter the experience. Redeeming mobile rewards can be even more challenging. Visa Commerce Network aims to remove friction in the redemption process by eliminating the need for coupons or codes at the point of sale. It connects rewards and transactions between two merchants on Visa’s payment network. Opted-in consumers activate merchant rewards either online or in a mobile app. They can then redeem the offer automatically when using Visa cards to make a payment at another participating merchant.

By removing the friction for the consumer, Visa aims to make rewards a more effective acquisition and retention tool for merchants. The Visa Commerce Network has already been trialed with several merchants, providing customers with a series of deals when purchasing at participant outlets using Visa cards. The initial lineup of merchants included Dunkin’ Donuts, Regal Entertainment Group, Shake Shack, and Uber. In one of the trials held in December 2015, Uber taxi users in Boston received discounted rides when they used their Visa card to make purchases at Shake Shack. Visa says that the promotion saw Shake Shack benefitting from double customer acquisition rates and higher customer spend; Uber riders saw the rewards seamlessly credited to their Visa cards.

The Visa Commerce Network is built on the TrialPay platform that Visa acquired in 2015, rather than being enabled by a third-party loyalty platform such as Cardlytics (which provides card-linked loyalty programs) or one of the numerous mobile loyalty specialists in the market. All tracking of promotions is managed by Visa. Merchants receive aggregated, near-real-time reporting on their programs with the ability to see how offers and promotions are affecting local spend throughout the campaign lifecycle. Visa is exposing the Commerce Network’s APIs to merchants, which will enable them to build more personalized and interoperable reward and loyalty applications. This is in step with the Visa Developer Platform, another new initiative from Visa that opens its payment network APIs to third-party developers.


Further reading

“Visa underlines its credentials as a technology player with the launch of Visa Developer,” IT0059-000052 (February 2016)


Eden Zoller, Principal Analyst, Consumer Services

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