Visa is trying out a low-tech location-based offers system with Gap that doesn’t require check-ins or even a smartphone. It’s clever, but basically is a testing ground for the coming wave of NFC purchases.
Visa’s system, dubbed Gap Mobile 4 U, has been in testing since late 2010, but is rolling out now. The idea is simple: Retailer Gap is the only partner for now, and only Visa users who sign up for the service via a special website are eligible. When a client shops at a certain location, or spends a pre-defined amount on a certain day, they’re then sent discount coupons to their phones in the form of coded text messages. To redeem them, they merely have to show the SMS to the Gap employee at the checkout. It’s very low-tech, but it seems to be working for Visa, and the company may add other retail partners in time.
Gap benefits from the system by encouraging loyal customers to spend more, and garners rich demographic data from the people who’ve signed up to the program (presumably Gap could even work out which clients bought which clothes from the data, enabling them to work out how to sell, say, a denim jacket to 20-year-old women). The consumer benefits by getting discounts.
But the company that stands to gain the most from the system is Visa. It’s been experimenting with ever-more-21st-century payment systems recently, and while this low-tech “location-based” loyalty scheme is pretty basic, it’s probably got a far more important use: By being an opt-in system with a closely controlled advertising partner, the system lays the groundwork for the more sophisticated loyalty/location-based/check-in services that will accompany the roll-out of smartphone-based wireless NFC payment technology.