curiousgeorge45-ga:
Thank you for your Question regarding how programs such as the iDine
loyalty & reward program operates. I hope that you find the following
Answer is satisfactory.
Summary:
--------
The best source of information about the operations and technical
aspects of a third-party loyalty program such as iDine, is the loyalty
program itself. In the case of iDine, a publicly traded company, this
information is contained in their SEC filing. I have summarized the
details here.
Let's refer to the iDine program member as "the customer". The
customer goes to a participating restaurant, dines, and pays for the
meal using a credit card registered with iDine. The restaurant charges
the value of the meal (plus taxes, tip, etc.) to the credit card, just
like the credit card companies require. This uses the existing
point-of-sale credit card terminals that the restaurants already have
in place, and does not require the customer to present anything more
than the registered credit card (ie. no additional loyalty program
card to present, meaning that the restaurant does not need to put any
additional investment in a way to scan and transmit the loyalty
program card's info). The restaurant receives the full value of the
transaction from the credit card company, at the regular payment date
(varies by credit card issuer).
iDine has relationships with various credit card processors and data
presenters around the US. Through these relationships, they receive a
copy of all of the credit card transactions for their participating
restauranteurs. Bear in mind that the restaurant is already going to
be receiving the full value of these transactions from the credit card
issuers.
iDine looks through the lists of transactions for each participating
restauranteur, and identifies transactions that use a card registered
to an iDine customer account. iDine then records a credit to the
customer's iDine account for whatever percentage rebate is associated
with the transaction (ie. some restaurants have greater rebates than
others). iDine then also records a debit against the restaurant's
account for the contractually-agreed percentage that iDine is entitled
to.
This relationship between iDine and the restaurants is based on
credits and debits. iDine extends both financial and marketing service
credits to the restaurants, in exchange for food and drink credits.
The financial and marketing services offered include cash advances and
targeted marketing to iDine customers. As iDine customers dine at the
participating restaurant, iDine draws down on its prepaid credits with
that restaurant. Typically, the credits are drawn down over a six
month period, at which point another lump sum of credits is
"purchased" by iDine from the restaurant (in exchange again for a cash
advance or marketing credits). These food and drink credits are often
at a 50% discount from the retail value.
When a customer transaction is detected by iDine (through the lists
supplied by the credit card processors), iDine debits the restaurant's
account for the difference between the transaction value, and the
equivalent credits (ie. for a $90 meal where the equivalent iDine
credits were purchased from the restaurant for $50, iDine debits the
remaining $40 from the restaurant's account as it represents iDine's
cut). From this difference, iDine can then pay back the customer
(through a credit to the customer's credit card) the rebate amount (in
this example, let's say it's $20). Anything left over is iDine's (for
overhead and profit).
The only technology required is on iDine's side, for managing the
accounts and the set of debits and credits associated with each
transaction. The weak link in the chain is the completeness of the
transaction records supplied to iDine by the credit card processors.
If a transaction is not detected due to a missing record, then iDine
does not credit the customer for the rebate amount, and iDine does not
deduct the value of the food credits from the restaurant's account.
The restaurant will still get the full value of the credit card
transaction.
In many ways, the iDine program is similar to programs offered by some
credit card companies themselves, only broader in scope (ie. you can
register more than one credit card, and there is a lower membership
fee).
Details and Links:
------------------
The iDine annual report contains a detailed explanation of how the
program works, on pages 10 through 17 of the PDF file:
http://content.idine.com/IRN02AR.pdf
Conclusion:
-----------
The iDine approach varies from the approach of loyalty programs such
as airline frequent flyer programs and the Air Miles program in Canada
and the UK in that the customer does not need to present an additional
card to be credited. This also means that participating restaurants do
not need to implement any additional equipment (card readers) or
services (software upgrades to accommodate tracking and transmitting
loyalty card info). All of the processing is done by iDine, in
partnership with established credit card processing companies.
I hope that this answers your question!
Regards,
aht-ga |
