Dynamics, a company that has developed a system to convert existing card rewards to spendable cash at the POS, believes they have a winning model that will enhance the cardholder loyalty experience without disintermediating its stakeholders. In some way, the solution is able to “change” a consumer’s mag stripe to access their existing rewards and convert them into “cash” at the POS.
“Dynamics will boost the purchase volume (e.g., card transaction fees) that the card issuers, like Bank of America (BAC) and Citigroup (C), receive and reduce the level of unpaid credit card bills by enabling consumers to monetize their rewards points — giving them more money with which to pay. Furthermore, card issuers today allow users to redeem points online for items such as gift cards and electronics. A card issuer incurs a significant cost each time a physical reward has to be physically mailed to a cardholder. Allowing users to purchase any items they want in any store removes this fulfillment cost. As card issuers receive more value from the features, some of this value may be passed back to the consumer in the form of richer rewards and programs.”
The implication is that issuers can bypass fulfillment centers and enable consumers to redeem in real time. This assumes of course, that consumers know exactly what they want and when they want to buy it.
Dynamics has garnered a fair amount of interest in the market and landed a deal with Citi, back in 2010 (see http://bit.ly/a6WlLN) based on their technology that rewrites a card’s mag stripe on the fly to access multiple accounts. The jury is out on whether or not consumers want to actually interact with their cards, but Dynamics joins a growing list of solution providers trying to build out technologies to support real time reward spend.
