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Democrats use RFID Go-Tag for cashless payment at the convention

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Between the two political parties, the Democrats win the propeller-head award. In addition to their sophisticated use of social media to build a volunteer army and raise funds, they distributed a commemorative badge at their August convention that doubled as a prepaid card.

Using an RFID based technology known as GO-Tag and marketed by First Data Corp., each badge came loaded with $10 and was accepted for payment at over 100 POS terminals throughout the convention venue. Reports cited that the small buttons were distributed to over 5,000 journalists and delegates who happily tapped them at concession stands throughout Denver’s Pepsi Center to get free drinks and snacks.

The use of the cashless payment devices was covered by Business Week in their August 28, 2008 issue with the title “Go-Tags May Replace Cash and Credit Cards”. Reading the headline, I instantly blurted out “I need a new publicist” to anyone in my office who would listen. Similar payment devices and form factors have been around for over 10 years and I have been writing about them for nearly that long. I am surprised that a publication the stature of Business Week could be duped into giving a tired concept this much attention.

I can remember wearing a Java enabled ring from Sun Microsystems and paying for refreshments at a concession stand in 1998 at a CardTech SecurTech conference. For the next several years I worked on a number of smart card projects trying to transform the technology into a difference maker for loyalty marketing programs.

Chris Hughes, one of the founders of Facebook is quoted as saying “You can have the best technology in the world……but if you don’t have a community who wants to use it and who are excited about it, then it has no purpose.”

After many trials and pilots, mostly in Latin America, the consensus of people on the front lines was that smart cards were cool, but not powerful enough alone to improve the performance of a loyalty program. In addition, the Achilles heel of the technology was the need to invest heavily in new card acceptance devices at POS to read the smart cards. Producers of smart cards retrenched and have since found success in closed loop environments such as campus and large corporate settings.

The application of the Go-Tag by the Democratic party was perfect, however a cautionary note to Business Week is in order. If Go-Tags are to replace cash and credit cards anytime soon, a huge investment in POS infrastructure across North America will need to occur. I’ll cover this in full detail another time, but the slow ramp-up of contactless cards in the US despite heavy subsidization by major card issuers and associations supports this view.

The Business Week article highlighted that with GO-Tag, First Data is “placing a major bet on the fast-emerging world of mobile e-commerce”. To make these bets pay off, all constituents of the technology must realize benefits. In this case, the stakeholders are card issuers, retailers, and consumers.

Linda Gridley, President of Gridley & Co., a mergers and acquisitions advisory firm in New York voiced her doubts on behalf of the card issuers. “I’m all for innovation, but it’s tough when your customers don’t have the money to pay for it,” she stated.

Consumer demand is also in question. One would think that members of Generation Y (Millennials) would be twittering over this technology, and some industry pundits who used to beat the smart card drum are now postulating that the mobile phone will become the new uber-payment device. According to a recent study by Javelin research, this is not the case as “only 15% want to use a mobile device as means of payment.”

Retailers are the hardest to convince as changes to POS are viewed as peripheral to the core business. Try to change their minds and you either have to deliver a killer application or pay to put the device on the counter.

Before I start sounding like a member of the “grumpy old man club”, I want to emphasize that I applaud the use of the Go-Tag product in the convention environment. It was the right application of the technology, saved people time, and probably made the convention even more memorable for souvenir hunting delegates.

As for Business Week, before they decide to write about the next new payment technology coming to market, I wish they would give me a call. Please send your suggestions for a good PR person in response to this post.

…….. Bill Hanifin



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Loyalty Truth named among Top 50 Customer Retention Blogs

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