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Verizon’s investment in CardStar shows mobile loyalty, payments intertwined

August 24, 2010


CardStar gets a vote of confidence from Verizon

CardStar gets a vote of confidence from Verizon


Verizon Communications’ $400,000 investment in mobile loyalty specialist CardStar proves that value-added services are key to driving adoption of mobile payments.

CardStar developed an application that lets consumers consolidate their various loyalty cards and programs on a single platform. Given Verizon Wireless’ anticipated participation in a cross-carrier mobile payments initiative, the strategy behind its parent company’s investment in CardStar is made clearer.

“Verizon’s thinking behind this investment is likely recognition of the fact that value-added services are important if mobile payments are to catch on,” said Red Gillen, senior analyst at Celent, Boston.

“If Verizon is to offer NFC payments as part of a joint venture with AT&T and T-Mobile, it is going to have to offer some value-added services to entice consumers away from existing plastic payment cards,” he said.

“As has already been proven in Japan, loyalty programs and rewards are one such value-added service.”

The growth of mobile payments in the United States has stalled largely because the market’s diverse stakeholders have been unable to build compatible business models. However, a tipping point may be at hand (see story).

Many industry executives and analysts have wondered whether Near Field Communications will ever live up to its potential and reach the mass market (see story).

AT&T, T-Mobile and Verizon’s potential partnership for a mobile payments service is an opportunity to expand mobile commerce (see story).

Mobility is key to creating and retaining loyal customers (see story).

McDonald’s is one international corporation that has seen results from combining mobile loyalty and payments via an NFC platform, albeit in Japan (see story).

“Although this is still years away, it’ll be interesting to see how, and if, Verizon eventually integrates mobile loyalty and couponing with mobile wallets and contactless payments—the possibilities are numerous,” Mr. Gillen said.

“Customers could select a loyalty card or coupon from their mobile wallet to be used at POS prior to purchase,” he said.

“Better still, points and coupons could be integrated with payment without even accessing the mobile wallet, so that with one tap of the phone they could be automatically applied to the transaction.”

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Dan Butcher is associate editor on Mobile Commerce Daily and Mobile Marketer. Reach him at

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