Commentary
A Giant Enters The Local Deals Arena
- by Mark Walsh @markfwal, December 14, 2010
The super-hot local deals space just got more crowded, with Visa introducing a new iPhone app with offers from more than 50 partners including Papa John's Pizza, Holiday Inn, Tourneau and Pearle Vision. Through the free app, Visa will show users nearby locations of participating merchants where offers can be redeemed.
The deals and discounts presented can also be tailored to match consumers' lifestyle and interests across categories -- including clothing, jewelry, travel and entertainment. Account holders with Visa Signature cards will get special Signature offers in addition to the standard ones.
With the local deals segment to date defined by startups like Groupon, Offermatic and LivingSocial, Visa might be viewed as another established behemoth coming late to the party. But the big advantage it has over these competitors is that it already has the card numbers for roughly 40% of the credit card customers and 60% of the debit card users in the U.S.
No middleman is needed, so users' security concerns about passing on card information to an unknown upstart like Offermatic or a personal finance service like Mint.com are minimized or eliminated. Plus, Visa's visibility into account holders' purchases gives it the ability to customize offers according to their buying habits. And the fact that app users of have control over the types of deals they see is obviously better than a program providing only random deal-of-the day offers.
Of course, the quality of the deals themselves remains to be seen. But the Visa Mobile app rolls out with a pretty wide cross-section of national retail, hotel, restaurant and other chains. And given Visa's widespread merchant relations, the initial group of 50 partners is likely to grow, perhaps eventually sweeping in non-chain local businesses as well. The release of version for Android and BlackBerry phones may not be far behind, either.
The new app makes you wonder why the payments giant didn't roll it out sooner, and whether MasterCard or American Express will soon follow suit. But if it took startups like Groupon and others to show the way, Visa's entrance into the fast-growing local offers market online will certainly be felt by other players in the space.
Mark Walsh can be reached at walsh@mediapost.com
What will retailers say when Visa, MC and Discover followed by Amex start to act as retailers offering deals...
Sounds like the issuers and card transaction networks are facing hard economic times where transaction fees are not enough to meet investor yields.
Or maybe, this creates more transaction fees for them...either way, confuses the online retail landscape.
Channel conflict?
I think this is a brilliant move by Visa; with the plethora of offers available from everyone from issuing banks, associations, Groupon, LivingSocial and the like, managing deals has become a full-time job requiring it's own sub-folder in one's email and visits to multiple sites. To provide offers that are easily accessible. local and relevant — available on the one tool we are most likely to have while out shopping or looking for a way to kill time — is a smart move. And a way for Visa to remind cardholders of why they have a Visa rather than another association's card. I for one will be downloading this immediately and putting it to work for me.
Never thought about Visa and LBS. Makes sense. Every single retailer is their customer. They can basically send out a sales pitch to sign up for LBS with each monthly bill. Groupon is kicking themselves for tossing away $6bil. I don't even think Facebook has the ability to combat Visa if this is pursued properly. Visa can probably outspend Facebook $20 to $1 in development and advertising. (nevermind the up and comers like FourSquare). This will be fun to watch.
I'm pretty certain this is not nearly as big of a deal as you think it is. As Sylvie points out, it IS, in fact, only a matter of time before MS and Discover and most certainly AMEX follows suit.
Let's focus on the service itself: What incentive do the vendors have for following suit with Visa over Groupon? Oh, you say Groupon is a "middleman"? Well the vendors STILL have to pay Visa do they not? And they have to offer a discount to attract "customers" into their doors through the app, do they not?
The "criticism" of Groupon (et al) is if the coupons generate repeat customers. I see nothing from Visa that can answer that criticism any better than Groupon can.
NOW for some reality: Presenting, the Credit Card Act of 2009, a "brilliant stroke of genius for Obama (*gag*)" that limits the fees that credit card companies can charge. So what's a company to do? Find even MORE creative ways to generate revenue. And since they can't "charge" more fees, they have to try to gain more volume of transactions! Hence, get in the game of local coupon deals and try to take advantage of impulse buys! That's the reason for this - but unfortunately, the credit card companies are not known to be brilliant - only known to be sly and devious.
As for Chief Alien - one would think Groupon is "kicking themselves for tossing away $6bil" but I dont think so.
Groupon is probably going to go public. They are growing fast enough. They DOMINATE ScoopSt, LivingSocial, CouponCabin, etc.
Why can Groupon go public? Because OpenTable is public. OpenTable is probably the only business right now that is closest to Groupon. And OPEN is kicking butt right now.
So people would rather be ripped off by all kinds of charges, many hidden rather than credit card companies provide an additional road to discounting for products/services you do not have to buy ? Duh....