In an effort to widen its demographic, American Express announced today that it would be partnering with the latest social network marvel: Foursquare. If successful, it stands to become as solid as other big name partnerships such as Google’s love affair with YouTube or Citi Bank. While their partnering efforts are solid, their reasons are as different as well, American Express and FourSquare.
To understand the dynamics and what they mean to credit card heavy hitter American Express, one must understand the premise of Foursquare. In short, it’s a social network, much in the way Twitter and Facebook is. Still in its infancy, it’s slated to become as big as the other familiar names with its focus on local merchants and deep discounts for its users.
The company, just two years old, allows users to incorporate their smart phones as they check in to various locations, including malls, restaurants and bars. When they do, the added bonus for them is that they could win prizes or take advantage of those big discounts in the vicinity. Very location-specific (it incorporates GPS), it’s also a great way for American Express to study its users buying habits.
What American Express Brings
Of course, there must be dual benefits for both companies. Foursquare gains much of the love AMEX card users have known for years while also being made privy to special discounts by AMEX when they use Foursquare. Merchants around the world can play a role, adding even more potential revenue to their own bottom lines. With electronic alerts and notifications, users can swipe their American Express credit cards and have instant savings deducted from their total with never so much as an additional search being made to discover those savings; they’re automatic.
We Have Liftoff
This pilot program has garnered a lot of attention – both from the social networking set as well as other credit card companies. All eyes are focused on Austin, Texas as July kicks off the week long South by Southwest Interactive Festival. It’s an annual conference designed for technology start ups. There will be at least sixty local and national merchants on site to honor the first promo by Foursqaure and Amex.
The “Spend $5, Save $5” will allow cardholders to see first hand just how quick savings are applied. H&M as well as Sports Authority have already signed on. It’s expected by many in the financial sector to be the first of many promotional campaigns and there’s no better place to kick it off. As mentioned, American Express has been looking for a way to draw in the “under 35” set and a conference designed for technology start up companies is ripe with that demographic.
Loyalty and Convenience
Instilling loyalty and convenience is what Foursquare is hoping to accomplish in its efforts while American Express is looking to push its own envelope in a more localized way while leading the way for other credit card companies.
With many big names, such as Visa and MasterCard, already in the prepaid credit card business, American Express is choosing a slightly different route to draw its younger customer base. Foursquare wants to travel mainstream while AMEX is looking to stay mainstream. With no coupon codes to redeem or other requirements, many say it’s the new way of saving money. If successful, it will be a winning formula easy to replicate for other card companies.
New Technology Here to Stay
The one common denominator in all conversations this week include the belief that the new electronic wallets are here to stay. One computer expert with Kaspersky Labs says it’s “not a matter of if, but when.” With American Express and its millions of card members and digital capabilities along with the technologically savvy generation that’s barely out of its collective twenties and its ever growing application, this dynamic could make huge waves as the financial industry as a whole continues to evolve. The pilot program is expected to be in other cities this summer and ideally, throughout the nation by the time the holidays roll around.
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