Contactless Loyalty Scheme Gets Boost From Deal with Acquirer

Published by: NFC Times www.nfctimes.com
Published: Aug 17 2010
Ireland's largest merchant acquirer plans to roll out contactless loyalty using a service from Zapa Technology.

A deal between loyalty-scheme operator Zapa Technology and Ireland’s largest merchant acquirer, AIB Merchant Services, could see Zapa’s contactless stickers rolled out more widely in Ireland and also gain a foothold in the United Kingdom.

AIB Merchant Services, which is a joint venture between one of Ireland’s largest banks, Allied Irish Banks, and processor First Data Corp., owns nearly half of the merchant acquiring business in Ireland in terms of retail outlets. The joint venture is offering merchants its “loyaltyplus” service, which uses Zapa’s loyalty platform and its passive contactless stickers to enable consumers to tap their mobile phones or other devices to earn and redeem points for discounts and other incentives.

"The cost is very low, allowing small merchants who obviously don’t have a large amount of cash to work with to operate a loyal program," Sharon Duffy, marketing manager for AIB Merchant Services, told NFC Times.

The joint venture has signed up retailers with a total of 120 to 150 outlets since June, including a small chain in the UK, which Duffy declined to name.

She said merchants will pay up to a flat 30€ (US$38.65) per month to offer the service to their customers, though that fee could be as little as 15€ per month under a special offer that ends this month. AIB Merchant Services and Zapa would split the fee.

The merchants might also pay a little extra rental charge for their point-of-sale terminals, especially if they don’t have newer terminals that can accept contactless readers.

About 90,000 merchant locations accept conventional payment cards nationwide, according to the Irish Payment Services Organization. That would give AIB Merchant Services, which has a market share of about 48%, more than 40,000 merchant locations.

Zapa Technology, launched last year by John Nagle, the former head of Ireland-based electronic top-up and payments company Payzone, has 675 merchant locations in Ireland, with about 130,000 "active" stickers or Zapatags distributed to consumers, Donal McGuinness, Zapa’s chief operating officer, told NFC Times.

He defines active tags as those used at least once. All told, Zapa has recorded more than 1.5 million transactions to date, with transactions running about 100,000 per month, he said. The 675 merchant locations include those added recently by AIB Merchant Services, as well as small retailers in two towns in Ireland, Dundalk and Tuam, and about 60 outlets of the Insomnia café chain nationwide. Zapa also offers closed-loop prepaid payment with the tags for some of the merchants.

"If we go into larger retailers, they’re always going to want to integrate into their EPOS (electronic point of sale) and do more sophisticated loyalty and product-based loyalty," McGuinness said. "There is a huge number of smaller merchants like dry cleaners or flower shops, which would not be sophisticated from a retail technology point of view, but they always have a POS terminal. The point of this partnership is to allow all those small standalone retailers to have a sophisticated loyalty program at a low cost."

Duffy of AIB Merchant Services said the contactless stickers will cost merchants less than €1 apiece. That’s after they exhaust their initial allotment of stickers that comes with signing up for the service. The more merchants that order the stickers, the lower the price per piece, she said. A Chinese company, Shanghai Huayuan Electronic, supplies the tags, using a 1-kilobyte Mifare chip.

Still, Ireland is a small market and AIB Merchant Services controls less than 1% of the acquiring market in the much larger UK. Zapa's plan is to expand throughout Europe, which will be a difficult task. But it appears to have set its sights on the UK next.

"There are also additional significant deals Zapa has with multiple players in its pipeline for UK," Mohammad Khan, president and co-founder of U.S.-based Vivotech, told NFC Times. He declined to name the players. Vivotech supplies the technology behind Zapa's loyalty platform and also sells the contactless readers.

McGuinness said Zapatag users at stores served by AIB Merchant Services pay for purchases with their conventional debit or credit cards and can tap their tags at any point during the payment transaction to earn or redeem points. The tags store an ID number, which is transmitted to the POS terminal. Points are stored on a server.

Zapa also offers separate phone apps for both smartphones and feature phones that enable consumers to check point balances and see a record of points they’ve redeemed. Also, merchants can send customers offers via SMS or e-mail.

"What we’re really trying to do is emulate a pure NFC experience with these stickers, so when the real NFC arrives, we can have a seamless transition."

With the loyalty service, the smaller merchants can track some of their customers’ buying behavior, which is nearly impossible to do for those same merchants that offer discounts or other bonus programs using paper cards, McGuinness noted.

But the AIB Merchant Services-based rollout faces challenges.

Irish banks are not yet rolling out contactless payment cards, so the readers the acquirer installs would only be used for the Zapa scheme, at least for the time being.

And passive stickers offer no direct communication with applications on the handset. Moreover, when consumers replace their phones, they’d likely need new stickers. And if a large merchant or bank wants to issue their own contactless stickers, consumers would be hard-pressed to support more than one tag on the outside of the same phone.

Those problems go away with full NFC phones. But while NFC handsets are on the way, it could be at least a few years before there are enough models available for Zapa to bid farewell to the stickers.

AIB Merchant Services’ Duffy noted the contactless readers the company installs for the Zapa service could also be used by the merchants to accept standard contactless payment cards when banks issue them.

Deal paves way for customer loyalty schemes

SMALL RETAILERS will be able to establish inexpensive customer loyalty schemes following a deal between AIB Merchant Services and Irish-based Zapa Technology. The exclusive agreement means merchants can use Zapa’s contact-less chip technology in their shops, removing the need for individual loyalty cards and systems.

Zapa uses near-field communications technology to produce a small sticker that can then be stuck to a customer’s phone or wallet. Users can then tap the sticker on a terminal at the point of purchase, registering it on the chip and gaining rewards in return.

One sticker can be used across any number of shops, with each business’s loyalty programme working independently of others.

“This is a merchant-specific scheme but the sticker works in multiple merchants,” said Chris Mason, managing director of AIB Merchant Services. “The points a customer earns across shops does not get consolidated into one place; each retailer can have their own scheme in place.”

However, it is also possible for a single loyalty system to be established across a number of shops, for example, allowing businesses in small towns to offer a centralised reward scheme to those who buy locally.

In addition to saving money by not having to roll out and manage an individual loyalty scheme, the Zapa system will give merchants access to more customer information, Mr Mason said.

“The merchant can go online to see how many points have been redeemed, how many customers have the tags and what they are doing. It offers a lot of information in terms of who’s been in their shops and how regularly they have done so.

“They would also have the chance to communicate with them through an SMS or e-mail campaign.”

In order to participate, retailers will have a special terminal installed, which will cost up to €30 extra per month depending on the number a retailer takes. Merchants will also be given a supply of Zapa stickers that cost less than €1 each, a cost the retailer is able to pass on to the customer if they wish.

Zapa was launched last year by Alphyra founder and former Payzone executive John Nagle. The company’s first venture was a loyalty scheme with the Insomnia coffee chain.

In response to recent developments in the cards industry relating to credit and debit cards in Ireland, we would like to communicate the following points as this may impact the fees and charges applied to your account:

Visa and MasterCard have mandated that all Card Acquirers, including AIB Merchant Services, quote and display the Merchant Service Charge by card type on your statement. This means that we are required to show separate charges for each Card Scheme by card type (i.e. a separate charge for Visa consumer cards, Visa commercial cards and Visa debit cards and a similar structure for all MasterCard card types).

On 26th April 2010, Visa announced that they intend making further changes to the fees they charge for processing Visa card transactions which, among other things, will result in an overall reduction in fees for certain Visa debit card transactions. It is anticipated that Visa will announce the details of these changes, together with their effective date, in late summer / autumn.

Card Issuers continue to introduce new card products in to the market.

As a consequence of these developments, and once Visa announces the relevant detail, AIB Merchant Services will undertake a detailed review of our charging structure to assess how these developments may affect your Merchant Service Charge.

This comprehensive review will be completed in the months immediately following Visa’s detailed announcement, at which point we will write to you, if necessary, with details on how the revised pricing structure may affect you and when these changes will be applied to your account.

If you have any queries in relation to this, please contact us on 1850 200 417 or email us at info@aibms.com.

This document outlines the procedure required by Merchants to clear a Bad Mac error.

The procedure for INGENICO Terminals.

INGENICO TT41 and INGENICO TT42 terminals.

- From the READY prompt press the Function Key.

- The ADMIN menu will now be displayed.

- Key in 32 for function 32 and then press ENTER.

- The terminal will display the function details for confirmation, press ENTER.

- Swipe the supervisor card through the terminal.


INGENICO 7770, 7780 and 5100 terminals.

- At the READY prompt press the MENU key.

- The Transaction menu will appear, press the MENU key a second time.

- Using the arrow keys highlight the SELECT FUNCTION option and press ENTER.

- Key in 32, press ENTER.

- Swipe Supervisor Card if prompted.

- At the 'EFT Reset MacKey ?' Press ENTER.

- If there is more than one acquirer, you will have the option to select the one you require.

- Press ENTER for all cards, or press the down arrow for SELECTIVE cards and press ENTER.

- At the 'Reset MacKey ?' press ENTER to reset or use the down arrow to select NO and press ENTER to move onto the next acquirer.

- You now have the option to print ALL acquirers or a selection of acquirers.

- Press ENTER for ALL or the softkey adjacent to the arrow for a selection.

- The acquirers will be displayed individually press ENTER to select the acquirer displayed or the softkey adjacent to the arrow to move to the next.

- The terminal will now print a receipt to confirm that the MAC keys have been reset, if the printout shows any stored transactions these will need to be reprocessed. The terminal will now return to the READY prompt.

- After contacting the acquirer, perform a test transaction to confirm if the terminal is working.


The procedure for HYPERCOM terminals.

- From the main sale screen press the BLUE FUNCTION button, type 76 and then press ENTER.

- At password prompt TYPE 0000 and press ENTER.

- Swipe Supervisor card.

- The screen will display hosts AIB or AIB and AMEX, press the button NEXT TO AIB.

Message shows Reset MAC Key, are you sure ? - Press ENTER for Yes.

This completes the procedure.


The procedure for 123 Send terminals.


- Press the MENU button twice to bring up a new menu on the screen.

- Select F3 for the supervisor menu.

- You will be prompted to key in your password.

- Press OK once the password is entered.

- Select F2 for the password menu.

- In the password menu, select F2 for MAC reset.

- Select F4 for Single Acquirer.

- The terminal will display the first acquirer loaded. Press F4 untill you see AIB.

- Press OK to select.

- Once you have selected AIB, confirm the reset by pressing F4.

- The terminal will print a receipt to confirm the reset.

Retry a transaction - this should now be processed as normal.


Contact our Merchant Support Centre for more information


AIB MERCHANT SERVICES
1850 200 417 or +44 1268 567121


FIRST TRUST MERCHANT SERVICES
0871 200 1437 or +44 1268 567122


AIB (GB) MERCHANT SERVICES
0871 200 1436 or +44 1268 567123

In light of recent events, AIB Merchant Services are reissuing the following fraud prevention communication.
Cardholder data can be stolen where PIN Entry Devices (PED's) in retailers’ premises are replaced with tampered PED's. The criminals involved in this fraud have in the past impersonated terminal service provider personnel and switched out the genuine PED's with compromised units. These compromised units contained a mobile sim card that enabled the fraudsters gain access to cardholder information.
We strongly advise that you initiate a process as appropriate and implement the attached IPSO (Irish Payment Services Organisation) best practice guidelines for PED security. Your terminal service provider can provide specific input with regard to measures to be taken to detect unauthorised changes to your terminal configuration.
This type of criminal activity adversely impacts the retailer involved, the card payments industry and most importantly inconveniences your Customers. The incidence of such tampering thankfully remains a rare occurrence, however the impact of even a single incident can be significant. By adopting the above guidelines we can work together to reduce payment card fraud.

The IIA (Irish Internet association) and AIB Merchant Services presented a half day seminar designed to inform businesses operating in an online/card not present environment on fraud risks that they face and the ways in which they can mitigate their exposure.

The seminar looked at the steps businesses can take to minimise fraud and protect Cardholder data. We invited a number of experts in the field to attend and advise on the implications of storing data, the ways in which this affects businesses with particular reference to Payment Card Industry and 3D secure compliance.

The content of the seminar was as follows:

• Introduction – AIB Merchant Services
• AIB Merchant Services: Fraud trends, case studies and fraud prevention methods.
• MasterCard: Compliance requirements and operating regulations to protect businesses, their customers and the MasterCard brand.
• Irish Payment Services Organisation - Trends and current fraud issues affecting the payments industry
• Realex: Fraud landscape, types of fraud, how fraud is experienced and managing fraud.
• TrustWave - How they and AIB Merchant Services can help businesses progress compliance.

The presentations from the day are can be downloaded here -

June 2009 sees the re-launch of the AIB Merchant Services website which has been redesigned with a vibrant new look and useful content. The website contains many features such as the latest company and industry news, compliance information, improved usability and navigation.

This website is designed to offer useful information on Card acceptance services. The information available will benefit businesses new to card acceptance while giving businesses already accepting cards, information on new products and services to support their business requirements.

Today it is vital to offer your customer the ability to pay by card. AIB Merchant Services offer Credit and Debit card processing including tailored solutions for a wide spectrum of business types through a variety of point of sale terminals, call centre and internet capabilities.

The new site covers information on the sector specific offerings available and guidelines for the safe acceptance of cards by businesses in both card present and card not present environments.

Who are AIB Merchant Services ?

AIB Merchant Services is Ireland’s largest provider of card acceptance services. We are a joint Venture between Allied Irish Banks, p.l.c., the market leader in financial services in the Republic of Ireland and First Data Corporation, a global leader in electronic commerce and payment services.

We offer a comprehensive range of solutions for businesses wishing to accept all forms of electronic payments. We have extensive capability and knowledge of providing merchant acquiring services to customers across all industry sectors.

We offer flexible solutions to meet your card acquiring needs, improve cash flow and reduce bad debt provision. Increased cards payments also results in increased security as less cash is being held on the premises.

AIB Merchant Services pride ourselves on working with businesses to understand their business requirements. We have the expertise to assist customers to decide on the most appropriate payment solution for their business. To support this, AIB Merchant Services are continually investing in their products and services to ensure Customers have the best payment solutions available.

Coming soon...

In the coming months we're going to be adding to this site. One of our key aims is a Merchant area that gives our clients access to Merchant specific information. Watch this space...

So, what do you think?

Let us know by sending us a message info@aibms.com

From the 1st of July 2009, MasterCard will publish their interchange fees and rules on their website. Click here for further details www.mastercard.com