• by Mark Walsh  @markfwal, July 20, 2011

Mobile startup Stampt, which aims to replace the traditional store loyalty card with an app, formally announced its new service today. The Stampt app, launching initially on the iPhone, is intended to replace "buy 10-get-1-free" paper cards with a single solution for keeping track of rewards programs at local shops and restaurants.

For merchants, San Francisco-based Stampt promises to provide a better way to increase customer loyalty, purchases and brand awareness. The way it works is that users scan the Stampt app on a Stampt-supplied 2D code near the register after making a purchase the usual way. The app records the purchase and stamps the digital card, which can be redeemed for a reward once filled.

The basic service -- which includes the Stampt scan code, in-store displays, social media integration via Facebook and Twitter, and security controls -- is free for business customers. Where the company plans to make money is through premium services including advanced analytics and the ability to provide targeted special offers and get advertising within the app.

So far, Stampt says hundreds of small businesses in San Francisco, Cincinnati, Chicago, and New York have adopted the Stampt service including restaurants, yoga studios, coffee shops, dry cleaners and auto garages. Each merchant card is branded for that particular business, and store owners create their own rewards.

While rolling out with local businesses to start, Stampt is seeking to sign up national chains. "Stampt has initially targeted small businesses because the decision makers move fast and Stampt is a high-value solution to that market," said company co-founder and CEO Brian Kelly. "Stampt can work in conjunction with any other solution a merchant may have."

But that's also where the company will run into intense competition from existing mobile loyalty and location-based apps from CheckPoints and shopkick to Loopt and Foursquare. In addition to working with these and other mobile vendors, some national retailers like Starbucks and Target already have their own apps powering m-commerce, loyalty programs and special offers.

Beyond that are Near Field Communications (NFC)-based mobile payments ventures like Google Wallet and Isis, the wireless carrier initiative which this week added Visa, MasterCard and American Express as key partners. Given the competition from established mobile players at the national level, Stampt might be smart to stick with the small business market as its sweet spot.

Kelly said the company has not raised venture capital to date, but is actively pursing first-round funding to continue expanding. In that vein, Stampt also plans to extend its app to Android and BlackBerry phones.