Bill Hanifin
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Cartera Commerce, until recently known as Mall Networks, and Vesdia, long ago known as Baby Mint, have announced a merger that will change the supplier side of the merchant funded loyalty landscape.
Or will it?
Like my reported allergy to penicillin, someone told me long ago that there was no such thing as an original idea. I’m not sure if either statement is true, but if the latter really is the case, then the U.S. Patent office should close its doors and all the filers of new business process patents should just focus on better execution rather than fencing in their intellectual property from others.
Merchant funded loyalty was an “original idea” only about 6 years ago. In that distant and ancient age, Vesdia and Affinity Solutions were the two pioneers who laid claim to birthing the concept and in my book, it has been Affinity Solutions which has best developed and executed the concept over the years.
Merchant funded loyalty programs were born of “the necessity” also known as the Walmart litigation against Visa and MasterCard. That litigation was settled in 2003 and ultimately caused the associations to pay Walmart and other retailers enormous sums of money.
In a uniquely 21st century evolutionary pattern, merchant funded programs were deployed rapidly across the debit card portfolios of major card issuers in the U.S. and multiple competitors joined in the game. Within a short 4 years or so, merchant funded programs evolved from innovative and industry-saving strategy to table stakes for savvy debit card issuers.
That’s good for business, but some trimming of the competitive group was inevitable as pricing and demands for innovation placed pressure on the supplier group.
The re-branding of Mall Networks to Cartera is partial acknowledgement that suppliers needed to expand their branding and capabilities set. The merger of Cartera and Vesdia is further testimony to the ongoing consolidation in this sector.
With the Card Act of 2009 implemented last year, and the Durbin Amendment on the way, card issuers will continue to pay attention to providers which deliver valid consumer value propositions for their cards at a manageable cost. There is plenty of room for growth in debit card rewards and in the broader rewards and loyalty markets.
Due to my affiliations throughout the supplier side of the loyalty marketing business, I will hold further comment on this merger for the moment. Let’s just agree that this space deserves watching, and the significance of this merger will be better understood as 2011 continues.
