How to make a profit off of a transaction

[krymson]

So I have this idea that I'm working out with an investor. To not try and get into any specifics here's what I'm trying to do...

Someone has a "Membership card" that they use at a local business and get a discount, I'm basically charging the business a small fee for that transaction for bringing that customer to that business when they use the membership card. What I'm trying to wrap my head around how to automate getting that small fee without having to bill the business. I've thought about building an app that the member pays through, but I don't think that's the best solution, I would rather the business swipe the card, the fee gets sent my way and the rest towards their merchant account.

What would you suggest?

[Harold Mansfield]

So the member pays for the card, the merchant is discounting the purchase AND kicking back a fee to you?
Is that the premise?

[Freelancier]

... and simple enough that a slightly stoned high school kid working a dreary afternoon away won't screw it up.

Good luck with that.

Look at something like iDine for an example of how to make it work. It's based on a credit card being registered with them and their being able to see those transactions (how?) as they happen. Once you figure out how iDine did it, you'll know how you have to go about this. Only works with credit card transactions, of course, cash is untraceable.

UPDATED: the other option I've seen that can work (for larger systems) is what the schools around here do, which is have a bar code that attaches to your key chain that some grocery stores scan and those stores then use the total transaction to make a donation to the school. But that's based on a single grocery company running the program and having their IT department handle the details, not a single bar code that gets scanned in a lot of different places (some of which -- like a restaurant -- won't even have a bar code scanner).

[Harold Mansfield]

I'm thinking a card reader that every merchant has, which is both connected to their POS systems, and your database and automatically transferes money from the transaction to your account would be expensive and troublesome to even implement.

The first step would be that every merchant be using the same POS system. That is unlikely and the biggest issue. If it were all the same POS, it would be easy (I should say 'possible') to implement a universal discount card that is accepted by all of them. That's how chains are able to do it.

[Freelancier]

I'm thinking a card reader that every merchant has, which is both connected to their POS systems, and your database and automatically transfers money from the transaction to your account would be expensive and troublesome to even implement. The problem here is that you're asking all these merchants to get their overloaded (and usually recalcitrant) IT departments to do some programming for this, and the odds of that are low unless the business is going to be guaranteed millions of dollars from the program. Small merchants won't have the IT department at all, so they have to rely on an outside programmer to make it happen, and that's a big hill to climb as well.

[billbenson]

... and simple enough that a slightly stoned high school kid working a dreary afternoon away won't screw it up.

Good luck with that.



A guy in college smoked a couple of joints on his way to school every morning and graduated with just under a 4.0. Of course if I did that I'd graduate with a 0.5 :)

[Harold Mansfield]

Take away the per transaction fee that goes to you, and it's easy to implement a discount card that merchants can manually apply. Like the old S&H Greenstamps, Groupon, and coupons.

Do it online and it's even easier because your site could be the gateway to each merchant and it's just a basic affiliate program set up like eBates where they kick back part of their affiliate commissions.

But I don't see a way to connect different merchants with differing POS Systems to your database so that fees back to you are automatic. At least not easily. With enough money and the right programmers you can build anything.

I sometimes shop at the outlet mall on the NV, CA border and they have a mall wide discount card. Each merchant that honors the card has a swipe card reader connected to their POS that applies the discount, and also the card keeps track of usage so that you get additional bonuses from the mall's customer service desk like free shuttle service if you make at least one transaction, double discount days, and so on.

I'm sure this is something that the mall set up, and probably supplied the readers so that all of the merchants can participate since they all do not have the same POS System. But I don't think it applies a kickback to the mall. It's more of a promotional thing to attract customers and make it easy for tourists to catch the shuttle from the strip to the border.

So, yes it is possible.

http://www.fashionoutletlasvegas.com/ep_greencard.asp

[krymson]

Thanks for all the useful feedback guys. The investor is actually my boss and we are an IT company so we'll be developing everything on the back end. I had actually thought about something like iDine does but im trying to wrap my head around how they do it or offer a card like paypal that's connected to the consumers bank account and as part of the "Transaction Fees" there's our "Referral Fee"... But I think you have to be in cahoots with a bank or something.

There's a lot more research involved but i know where I want to go with it... now its finding that route from A to B. Thanks for all the good advice guys