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Paycloud offers digital wallet for loyalty cards

Consumer Reports News: October 14, 2011 05:08 PM

SparkBase, a company whose software processes loyalty card program transactions for 40,000 small- and medium-sized businesses around the country, is launching Paycloud, a new app for Android and iPhone handsets that uses your smart phone as a digital wallet to store and replace your paper and plastic customer loyalty cards.

Paycloud is expected to officially launch on October 27th. Right now, you can only use the service at a handful of stores in the Chicago area, but SparkBase expects to have its service available in 3,000 locations by the end of the year. The company is also planing to add credit-, debit-, and prepaid card capability. “By the end of this year, consumers will be able to use Paycloud to pay for their purchases,” said Doug Hardman, CEO of SparkBase.

Paycloud uses any smart phone’s existing speaker to transmit an ultra-high frequency encrypted validation code to a Paycloud sensor connected to the cash register. The code changes each time and uniquely identifies the phone, merchant, cashier, and other transaction details so that, even if a crook recorded it, it’s not re-usable later.

By contrast, to use services such as Google Wallet on a smart phone, a shopper must have or buy specific phones with a built-in near-field communications (NFC) chip, and a merchant needs a MasterCard PayPass terminal that can read the NFC chips embedded in phones and in certain plastic payment cards.

With only 3,000 merchants, however, Paycloud has a long way to go to catch up with Google Wallet and PayPass, which have 150,000 merchants or about three percent of the 4.5 million U.S. retailer universe. Sparkbase says it hopes to have 60,000 to 100,000 Paycloud locations by the end of next year.

Paycloud [Official site]

Jeff Blyskal

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