The days of presenting a paper coupon or promotional code at the cash register to get your discounts may be a thing of the past.
Using a process known as card-linking, the invisible infrastructure of the web can connect debit and credit cards seamlessly with merchants' rewards, points and loyalty programs. The technology is expanding even faster than e-commerce, with card-linking marketing potentially taking as much as $50 billion in annual spending in the near future, according to the CardLinx Association's 2016 industry survey. Global advertising spending reached an estimated $330 billion last year.
Card-linking, buoyed by network data shared from payment processors such as Visa (V) and MasterCard (MA) , is particularly beneficial to bricks-and-mortar retailers challenged by the rise of online stores like Amazon (AMZN) , since it provides them with data to connect with customers more effectively.
"Merchants are flying blind -- when a consumer walks in, they have no idea whether that person checked them out online. They don't even have an idea as to whether this is the first time the consumer has walked into their store or this is the hundredth time," CardLinx Association CEO Silvio Tavares said in a phone interview. "Card-linking enables them all of a sudden to no longer be flying blind, but really be empowered with data."
This is how it works: Customers take their existing credit card and link to a digital account with the merchant or the card processor. Then, when they enter a store and swipe their cards, they receive a real-time discount on their purchases without having to do anything more.
The Visa Offers platform, for instance, allows consumers to enroll an eligible Visa card in a program, activate an offer, and then use their enrolled Visa card to make a qualifying purchase, according to Visa's website. The company powers the system by giving back-end access to merchants' software developers.
Restaurants are the best category for card-linked offers, 42% of the association's survey respondents said, followed by 13% who voted for department stores. Customers prefer some version of a cash-back discount, the survey highlighted.
The technology has already caught the attention of struggling retailer Sears (SHLD) , which is attempting to strengthen its off online-to-offline business (customers who start shopping online and then visit a store) through the "Shop Your Way" program, accessible through mobile apps or online.
The platform, which adds a variety of sharing features on top of loyalty-related coupons, "depends on member activity to generate social benefits and insights," Jason Hollar, Sears CFO, said on the company's December earnings call.
"Our reputation and brand will change as our members become more engaged with the Shop Your Way network," he said. "Shop Your Way already has a large member base, which is evidence of the potential of the platform and shows how important Shop Your Way is to the future and growth of the company."
Sears, which said in a recent regulatory filing that it's working to eliminate "substantial doubt" about its "ability to continue as a going concern," also entered into partnerships with Citi (C) Retail Services to offer the Sears MasterCard. The card offers a complimentary 5% back on gas purchases, 3% on grocery and dining spending, and 2% on buying at Sears and Kmart.
Shop Your Way and Sears Auto Centers also teamed with Uber to offer points to riders and drivers, Hollar highlighted.
"The consumer wins because they're getting a personalized offer for them that enables them to save money," Tavares said. "The merchant's really happy because they are able to target an offer and get it to the right consumer at the right time. The banks are happy because it means that consumers will use their cards more."
American Express (AXP) and Bank of America (BAC) are among the finance firms that utilize the card-linking technology, and the most common way consumers receive card-linked offers is through their mobile banking app, Tavares said.
"From the consumer's perspective, it's like magic: They love it," Tavares said. "The merchants, they also love it because it enables them to target a specific offer, to a specific consumer, and then see the success of that offer, how that converts into an in-store purchase."
The CardLinx Association was founded in 2013 by MasterCard, Facebook (FB) and Microsoft (MFST) . Members of the association include companies such as Whole Foods (WFM) , Chevron (CVX) , Discover (DFS) , First Data (FDC) , and General Mills (GIS) .