MasterCard is the latest credit card issuer to announce plans to enter the already crowded daily deals sector. MasterCard is teaming with Local Offer Network to offer card holders special deals and savings on items or services. The new product, called MasterCard Offers Services, will launch by the end of this quarter. The service will target customers according to their geographic locations.
American Express and Bank of America are among other major financial services companies that have recently jumped aboard the daily deals bandwagon. American Express has linked up to make offers through Twitter and foursquare, while Bank of America is testing its own deals program based on customers’ spending habits. The popularity of Groupon (which went public late last year) is driving interest in this volatile sector that is filled with competitors and rather low barriers to entry.
The trend also goes the other way. LivingSocial launched its own credit card last month. The second largest daily deals provider (behind Groupon) is trying to help businesses retain customers following the flood of demand many experience after offering a deal. The LivingSocial card, offered by Chase, gives users credits each time they make 10 purchases in one month. The credits can then be used to buy LivingSocial deals. The rewards program could help drive customer loyalty among LivingSocial businesses. The deals card also could help incentivize charge card use as some people continue to be hesitant to make purchases on credit following the recession.
Credit card companies and others are excited to enter the daily deals sector as they view it as an opportunity to connect with their customers through social media. Daily deals providers also are eager to team with big financial companies to offer payments services such as credit cards. It will be up to the consumer to decide if the new programs are beneficial, or just another gimmick to win their loyalty.