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Payback's India bet

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, Germany's largest loyalty solution provider, is eyeing a larger slice of the Indian loyalty card pie. The first step was taken last year when it acquired a controlling stake in bonus programme “i-mint” and rebranded it as Payback India.

Payback India has 10 million members now. But that number is now expected to go up sharply with the German firm tying up with the -led , the country's largest retailer.

Payback says it will double its presence in India from 1,500 outlets to 3,000 outlets following the Future group tieup. For the Rs 12,000 crore Future group, the tieup makes sense as Payback, which has 25 million cardholders in Germany and Poland, has seen at least 10 per cent increase among its loyalty card holders in those two countries because of frequent visits. Future Group will introduce Payback as its new loyalty programme from September this year.

But what does Payback bring to the table in a market which already has several loyalty card providers? A lot, says , ED, customer strategy, Future Group. Unlike competitors, a customer can redeem their points at any of the 1,500 Future group store and will not be tied to the point of purchase. “In this programme, the ability to collect and redeem points is vastly enhanced. Customers who want to redeem their points can do so at Ezone stores to buy a colour television or at Pantaloons to buy a T-shirt,” says Rishi.

In another first, Payback will inform customers before the deadline for redemptions expire. The whole strategy rests on a simple principle. Payback's multi-partner programme will allow customers to collect more points faster even from low margin sectors like grocery and service centres. The vouchers can also be redeemed from a wider network of channel partners.

The technological backbone that Payback will bring will also help everyone to share costs. The next challenge will be to integrate payment functions, supplementing programmes by adding online and mobile connection options and usher a new “couponing” system that is already popular in Europe and the US but currently has a limited play in India.

Loyalty Partners – Payback's holding company – was also bought out by American Express this year and once the operations get aligned globally, both Paypal and Payback can have a ride piggyback on each other's network.

The Future-Payback alliance comes at a time when almost all Indian retailers have loyalty programmes, which contribute to a significant share of their total sales.

For instance, 's loyalty programme First Citizen, has over two million members and 73 per cent of Shoppers' total sales comes through it. Both Payback and Future are betting on the 220 million customers who walk into Future's stores every year.

The loyalty card programme of Pantaloons called Pantaloons Green Card will be merged with Payback. Though Payback India has an exclusive arrangement with Future, it also wants to tie up with local retailers to widen its reach. For example, a telecom company is in its radar. Already tie ups with ICICI Bank, HPCL, Air India, Megamart, MakemyTrip.com are in place.

“Local business partners are very important. Once we have 'lighthouse' partners such as Future Group and the telecom company we are talking about, we will go to local partners. We will do it along with Future Group as they have a lot of local relationships,” says Alexander Rittweger, chief executive Loyalty Partner Group, the parent of Payback.

Payback also wants to replicate its success in the German market in India. For instance, one in every two households in that country hold a Payback card and it accounts for 10 per cent of total German retail sales. About 95 per cent of cardholders redeem their points.

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