Payments

Can CardSpring bridge the gap between online and offline transactions?

A number of companies are working on “closing the loop” between online and offline transactions. Another startup to enter this field is CardSpring. It offers a payment infrastructure platform which claims to enable app developers to add applications to the payment network.

Headquartered at San Francisco, California, CardSpring Inc., was established in 2010 by former Netscape Engineers. CardSpring has collectively managed to raise $10 Mn in funds since its inception. The management team at CardSpring consists of Eckart Walther as CEO, Jeff Winner as VP Engineering, Matt Wilsey as VP Business Development and Tim Cadogan as Advisor.

CardSpring has seen two major partnerships in the past:

  • Partnership with Foursquare and First Data payment network.
  • In May 2013, partnership with VeriFone, point-of-sale device maker.

The CardSpring web service API facilitates payment companies and point-of-sale vendors to get card-linked services. These services created by developers which enable merchants to connect with customers and expand their business. Each time a card is swiped, the card’s information is sent via the payment network to process the purchase. CardSpring links payment systems and other online process, like coupon redemption or loyalty programs so that every swipe does more than just to complete a purchase.

Various applications include digital coupons or loyalty programs for credit cards, debit cards, contactless payment solutions accepted by a merchant, virtual currencies, or innovative commerce apps. CardSpring’s API facilitates integration with other applications and services, like merchant and point-of-sale applications.

CardSpring’s recent launch, CardSpring Connect, is a new service bringing the power of mobile & internet performance marketing as well as analytics tools to local merchants’ existing PoS. Connect simplifies processes for local merchants to engage with leading publishers to create online-to-offline promotions driving new customers, repeat purchases, and greater spend at their stores.

The uniqueness that Cardspring boasts is that, on one hand, it associates itself to the payment network securely, and on the other it serves as a platform which enables developers to create payment apps through Web-standard APIs, thus, bridging the two networks. For example, having a $10 off coupon online by entering the credit card number, on subsequent payment with that card at a store, the payment network recognizes the card and the $10 credit can be obtained. Swiping the card can trigger an email of the receipt or an application. It would also check in on behalf of someone.

CardSpring charges a small fixed fee. If there’s redemption, a percentage of that redemption is charged with the terms varying as per the size of the partner. The general charges are about 10 to 30 cents. Even a free version is available at times.

Groupon, Foursquare, Square, LivingSocial, or Google are all attempting to close the redemption loop between digital offerings and in-store payments. Groupon attempted at a one-off solution by coupons offering daily deals. Foursquare has linked its merchant specials to AmEx card purchases, but not every card. Google Wallet has been trying to place payment apps in the smartphone. However, the industry is too fragmented.

CardSpring’s platform facilitates offline stores to evaluate the impact of the online medium on their business. Such payment platforms are in high demand. It can enable Groupon to track its coupon redemption without shipping specialized iPads to PoS. Foursquare can tie it to its specials and capture the purchase data for merchants in their dashboards. So can LivingSocial.

Besides moving money, CardSpring enables movement of payment-related data. However, CardSpring, unlike other card-linked competitors – edo and Cartera – is not a merchant facing platform. It is an infrastructure just as Twilio is for voice, or Stripe is for e-commerce.

LTP View: By eliminating the use of any new technology or other hardware changes, CardSpring seems to have come up with a simpler solution to a complex problem. However, convincing consumers to disclose their card numbers to enable applications may prove to be a challenging task.

Chiraag Patel

Chiraag Patel is a Senior Reporting Analyst and the Editor of Bitcoin and Virtual Currency channels at Lets Talk Payments. He is an engineer with deep interest in MMORPG, Virtual Banking, Game Currency and Virtual Cash. Chiraag enjoys Reading& Blogging with focus on New Innovation, Technology & Startups in the Payments Space.

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