Foursquare checks in to more revenue with credit card specials
In giving you a little something for spending with your credit or debit card, the startup gets to pocket a little something of its own.
Money in the bank. That's the motivation behind a new Foursquare initiative that lets members link their Visa and MasterCard credit or debit cards and redeem money-back specials from participating merchants.
Foursquare, a company banking on check-ins to power its Explore discovery feature, aims to encourage more of its 30 million members to tell the application where they are with the additional freebies. The places-centric social network also hopes to cash in from the program. The company pockets a fee for every credit redemption it processes.
Today's announcement marks the first significant expansion to the startup's credit card specials program, which Foursquare launchedtwo years ago. The program gives people automatic, coupon-free credit rewards for shopping at select venues.
Members can now sync Visa and MasterCard credit or debit cards with Foursquare to get $1 credited back to their accounts when they spend $10 or more at fast-food chain Burger King, the initial partner for the expanded program.
"Foursquare is in the business of connecting people with places, and places with people," Product Manager Noah Weiss told CNET. "We make money when those two parties are happy."
So how does it work, exactly? It's not simple, but it's also not terribly complicated either. People will see the Burger King credit card special when they check-in to the establishment or find it through Foursquare's Explore tab, which highlights nearby specials and places that might of be interest to individuals. After a person sync's his or her card with Foursquare, he or she can click to redeem the offer, and pay with the credit or debit card in question as they normally would -- meaning no coupon or voucher is required.
In the background, a company called First Data, Foursquare's technology partner, recognizes the transaction and offer to credit the special amount, in this case $1 at Burger King, back to the person's Visa or MasterCard account.
Foursquare still maintains a special relationship with AmEx, which has its own custom technology powering the purchase-to-credit process on Foursquare. The prestigious card company, for instance, is expanding its own presence on the location platform with a new spend-$20, get-$5-back special at AMC Theaters.
Weiss said that hundreds of thousands of users have saved many millions of dollars as a result of the AmEx credit card specials. While he still considers credit card specials a "pilot" program for Foursquare, the deals, which net Foursquare a fee for each redemption, will eventually grow into a core pillar, alongside and other to-be-announced merchant-friendly tools, of the startup's revenue model. Hopefully sooner rather than later. The Wall Street Journal reported that the company expected to bring in a measly $2 million in revenue for all of 2012.
Burger King is the first merchant partner to embrace the Visa and MasterCard credit rewards, but Weiss said that additional campaigns will be rolling out to users in the weeks ahead.