This summer, one startup will scrap the discount in favor of a freebie, offering credit and debt card holders cash gifts at various stores and restaurants.
The startup is FreeMonee, a newly launched endeavor from former senior executives at eBay, Oracle and Visa that's already raised $11 million in funding. It's neither daily deal service nor mobile coupling app, but instead a self-proclaimed "cash-gift network."
What is a "cash-gift network," you ask? The network is a collection of merchants and financial institutions. The "cash-gift" is FreeMonee's consumer incentive; it isn't a coupon or voucher, but a credit applied to your credit or debit account. You'll get an email, text or gift notice from your financial institution notifying you of the gift, and you can then spend the cash-gift at a specified retailer on whatever you'd like.
Essentially, your bank will recruit you to shop with a retailer, and in exchange for your patronage, you'll get free cash to spend as you'd like. In this schematic, the merchants cover the costs of redeemed cash-gifts. Banks make a percentage of each cash-gift purchase, which is also paid by the merchant.
Customers are matched with merchants in what the startup describes as a very complex process. "FreeMonee’s proprietary and patent-pending Adaptive Matching Technology … analyzes the transaction data of hundreds of millions of debit and credit card holders -- while protecting privacy -- and precisely matches merchant gifts with profitable consumer prospects that are likely to redeem based on previous purchasing patterns and predictive analytics," the company says.
In assessing whether the idea has merit, consider American Express's recent foray into deals and loyalty rewards in partnership with SCVNGR and Foursquare respectively. In both campaigns, card members were encouraged to connect their credit card to their location-based app to enable deals and rewards to go into effect with a swipe at the register.
For AmEx, the motivation is to increase the prestige of its card and to expose consumers to local merchants in its merchant network. More significantly, though, AmEx wants to close the loop between card member, transaction and merchant.
FreeMonee has yet to reveal the two financial institutions its already signed on, but we anticipate that their interests will likely align closely with those of American Express.