March 28, 2013, 3:23 PM

Sionic Mobile debuts Starbucks-style mobile payments for national retailers

Consumers can use Sionic’s Ion Rewards app to pay with their smartphones.

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Starbucks has been a leader in the nascent mobile payments industry. Coffee lovers pay with the Starbucks mobile app, the mobile version of the chain’s prepaid card, 3 million times a week in Starbucks stores, the company reports. Starbucks forecasts that by the end of 2013, 10% of store transactions will be made by mobile payment.

Knowing a good thing when it sees one, mobile payments and rewards firm Sionic Mobile has launched Ion Rewards, a smartphone app for Apple and Android mobile devices that enables consumers to pay with their mobile phones in a similar way at an array of national retailers.

“We’ve built on the success of Starbucks’ mobile payment and rewards experience by making it even easier for consumers to pay with their phones and earn Ions for shopping and dining at several thousand of their favorite brands’ locations,” says Bob Burroughs, vice president of product marketing of Sionic Mobile. An Ion is the name for the app’s reward points.

A consumer links her credit or debit card or Dwolla account to the Ion Rewards app. Dwolla is a mobile payments firm. To pay for a purchase, she opens the Ion app, which generates a list of nearby stores via the smartphone’s GPS. She selects the store, touches a bar labeled Pay Merchant, and enters the purchase total. The app generates a unique alphanumeric code and QR code. The retailer can scan the QR code if it has optical scanners or enter the alphanumeric code into their checkout terminal, treating the transaction as it would a gift card transaction.

Ion merchants are paid in cash from Ion’s bank account; Ion is the master merchant of record for all transactions and merchants receive the total checkout amount less a fee they pay Ion. The fee is 4.75% of the purchase price, with 1% of that going to the consumer in the form of rewards points, Ion says.

Sionic Mobile has partnered with Incomm, a prepaid products and transaction services company, to manage payments online through Incomm’s Giftango digital gifting subsidiary. Ion Rewards payments are handled just like digital gift cards that consumers can receive via e-mail and then redeem at the point of sale in stores. Incomm did not respond to a request to reveal what it charges Sionic Mobile.

“We partnered with Incomm/Giftango and use their digital gift card platform for POS transactions,” a Sionic Mobile spokesman says. “In simple terms, Ion Rewards users buy e-gift cards for the exact checkout amount and we display the bar code, much like the Starbucks app, for presentation at the POS. We are paying consumers 1% of their purchase amount in Ions in real time for buying and using an e-gift card. In this environment, Ion transactions simply appear as a gift card redemption in the national brands’ POS systems.”

Ion gives customers Ion reward points equal to 1% of their purchases. 1,000 Ion reward points equals $1. Customers also earn Ion points when buying select items from merchants. Customers can pay for merchandise with accumulated Ion points. Consumers can use Ion points at any merchant in Ion’s network; they are not limited to using points only at merchants where they earned the points. Merchants in the Ion Rewards network include Adidas, Barnes & Noble, Landry’s, Lands End, The Limited, Morton’s Steakhouse, McCormick & Schmicks, Nike, Oceanaire Seafood and Sephora.

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