ISO-focused gift and loyalty network operator SparkBase Inc. integrated its Paycloud rewards engine with Apple Inc.'s quick response (QR) code-based Passbook mobile wallet. While the move may not be affirmation of Passbook's relevance as the mobile wallet of the future, it indicates the importance SparkBase places on convenience in the mobile channel.
"What we're trying to do is meet business' and consumers' needs, and that need is really to make that loyalty card as available and accessible to them as possible," said Chrissy Neubauer Hand, Director, Loyalty Services and Marketing at SparkBase.
According to the Cleveland-based company, hundreds of small businesses in the United States have adopted Paycloud to power their loyalty rewards programs. The Paycloud app allows mobile users to earn and redeem loyalty points at those businesses. At the POS, users with Paycloud open on their mobile devices can scan QR codes or tap devices to terminals to earn and redeem points.
The integration of Paycloud via Passbook gives customers another option at the POS. "Adding it to Passbook is another way to access their card, however it's most convenient for them, whether it's plastic, Passbook or on their Paycloud app," Hand said.
The integration also allows SparkBase to leverage Apple's geo-fencing technology, which automatically opens Apple device users' Passbook – and the loyalty, coupon or other type of stored-value account within – when users are within 500 feet of corresponding businesses. "From a merchant perspective, they really seem so far to like that functionality because it serves as a reminder to their customers when they're near," Hand said.
In September 2012, Apple launched its latest version of the iPhone with Passbook a new feature on its updated operating system. At the time, cosmetic retailer Sephora said 17,000 users of its loyalty card added the card to Passbook on the first day the new iPhone became available. But evidence is mounting that mobile wallets like Passbook are not being used in great numbers by consumers.
SparkBase has seen a similar trend. "We see about two-thirds of our enrollment in Paycloud businesses coming through plastic cards versus app downloads," Hand said. She attributed the low adoption of the app to the comfort factor. In fact, SparkBase changed its strategy because of this reality.
When it launched Paycloud in the summer of 2011, the service was only a mobile application. In the second version of Paycloud, SparkBase added a plastic card component to it. "We found that customers still at this point … prefer and are most comfortable with that plastic card right now," Hand said.
QR code payments, however, are apparently taking off. Hand said SparkBase merchants prefer Paycloud's QR code functionality to the company's alternative to contactless, near field communication (NFC) -based payments. SparkBase garnered industry praise for its method of rendering smart phones contactless via audio communication between phones and POS terminals, rather than via NFC-embedded chips.
Hand chalked up the preference by merchants for QR codes to, once again, ease and convenience. "Primarily I think it's because the interface on the tablet just makes the transaction so easy and fast for their staff that they really love it," she said. "It's definitely a better user interface than sometimes the experience can be with terminals where you have to switch through screens."
Tablet computers are also gaining adoption as alternative POS devices. "From what we can tell right now, the tablet has been the more popular route for merchants," she said. "The feedback that we've gotten back from merchants is that the tablet is easier for them to use."
The settings where the tablet POS is most popular are in high-frequency businesses, Hand added, such as quick service restaurants and beauty parlors. 
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