Visa and AMEX Jump Into Attention Payment Game
NEW YORK | October 19, 2018 8:01am EST
(REUTERS) -- American Express announced today that it would be offering "American Express Prewards" attention payments, in a move seen as a response to Visa's introduction of "Visa Prebates" on October 3...
This is not an actual Reuter's story, of course, but at some point a story like it will appear, if Paybuyer's attention payments achieve proof of concept.
If that happens, credit/debit card networks and issuing banks (card companies) will rush to provide their own form of attention payments, that is, cash-back rewards provisionally credited before purchases. These payments can be definite payments, rather than probabilistic ones.
Card companies will enable attention payments because, like conventional cash-back rewards, they will incent people to use their cards. And, after one card company enables them, the rest will have to follow. Moreover, attention payments will often be greater than conventional cash-back rewards because a buyer would typically receive more than one such payment per purchase, as she examines multiple advertisers before buying.
Here's one way it could work.
AMEX could provide an online keyword-based ad directory. Imagine a user, Vic, goes to the "flowers" page. Each time he views a florist's ad, he would receive a provisional payment, say, 1% of his planned purchase. He might collect five such payments, for a total of 5% of the purchase.
The payments would be provisional in the sense that they would only be deposited in Vic's AMEX rewards account if he actually makes a flower purchase after viewing the ads. So, some period of time after he has viewed the ads, AMEX's software would automatically check whether Vic bought flowers with his AMEX card. If he made the purchase with his card, the payments would be transferred as cash into his AMEX account.
Card company competitors could collaborate in creating such an ad directory, which would be more efficient for customers and for the card companies themselves.
Often it will not be practical for software to verify that a purchase has taken place; a human may need to be involved. In this case, probabilistic processing is better. Therefore, it is probably best to combine definite and probabilistic payments in the same system.
In such a directory, users would choose which they prefer, definite or probabilistic payments. If a user chose definite payments, the system would default to paying in the manner above. And, if a purchase could not be checked accurately by software against the credit card purchase database, the system would convert the definite payment into a probabilistic one processed via the Paybuyer method.