ocial commerce has existed for a long time. Old-fashioned vestibule bulletin boards are an example. So is craigslist. It began as one man's online recommendations to a group of friends and mushroomed into a worldwi de electronic network of people offering everything from housing to jobs to romance.

Brick-and-mortar social commerce is alive and well, too. And one recent innovation has the potential to enhance local communities, as well as help ISOs and merchant level salespeople (MLSs) increase merchant retention.

The new project is Boston Community Change. It rewards shoppers by splitting 4% to 6% of each retail sale three ways:

• Cash rebate to the consumer
• Donation to the nonprofit organization or local school of the consumer's choice
• Allocation to one of 19 neighborhood commercial districts participating in the program.

Benefactors budding

This loyalty program is a joint effort between Boston Main Streets, a public-private initiative established by the City of Boston to revitalize the city's neighborhood commercial districts, and the Interra Project.

Brian Goodman, Neighborhood Business Manager for Boston Main Street, said the "intersection of interest for the parties involved - the merchants, the nonprofits and the consumers - has great potential. We're very excited.

"It doesn't cost the merchant a penny until a customer comes into their store and uses their card, and even then, it is seamless. Because it is a rebate, not a discount, accounting is very, very simple for the merchant. It will just appear on their statements as a rebate."

Any qualified merchant with a MasterCard-accepting POS can participate with just a 10-second setup.

Interra was established by Greg Steltenpohl, who founded Odwalla Inc., and Sridhar Rao, who founded the e-commerce site Exchange.com. Dee Hock, founder and Chief Executive Officer emeritus of Visa International, is Interra's Principal Advisor.

Concerned about local communities and economic sustainability, Interra's objective is to empower consumers through understanding the greater consequences of their purchase decisions. Interra's payment card is integral to its efforts.

In June 2006, Interra selected Santa Rosa-based Nietech Corp. to provide the retail loyalty technology platform that makes its three-way POS rebates possible.

Technology working

Nietech provides payment technologies that automate transaction-based philanthropy by distributing a portion of cardholders' purchases to their designated charities.

Through its proprietary Nietech Administrative System (NAS), the company provides an open-system solution that requires no POS modification. NAS enables payment processors to electronically collect and distribute merchant rebates and loyalty points from multiple sources to multiple parties.

The collaboration with Boston Main Streets is Interra's pilot program. It intends to expand nationwide.

"The Boston Community Change program is actually a three-legged stool, with three partners enabling the program to occur," said Christine Koncal, Chief Marketing Officer of Nietech Corp.

She credits Jon Ramer of Interra for having the vision to initiate "this social-commerce effort and to get the partners together and to build the entire solution chain, which goes beyond the Nietech-provided payment and loyalty processing to a very robust Web site that incorporates Google maps and other social-networking aspects for merchants and consumers alike."

The planning took a year and a half. Goodman said the time was necessary to build a solid system that would meet the mixed needs of merchants, nonprofits and consumers. "Interra and Nietech have been great partners," he said. "We've built a system with great perceived value to both the nonprofits and the merchants, and the ease of participation is excellent."

Although the card itself is swiped through a POS system, it tracks purchases using any tender - including checks or cash. Participating retailers, consumers and nonprofits can all track donations at the Web site.

Merchants boarding

"Getting merchants on board has been our first focus," said Goodman. "But we are working with the nonprofits and our corporate 'Main Street buddies' to get the word out to consumers, as well." Boston Main Street expects to have enlisted 500 merchants by June 2007.

"Many processors are increasing focus on merchant retention and using merchant loyalty programs to reduce merchant churn," said Koncal. "Merchants participating in this program are universally glad to be giving back to the communities in which they do business and are being offered special pricing and packaged services by a common processor to further induce and facilitate participation.

"Though Nietech's technology is processor-agnostic, acquiring processors have seen the program's advantages in acquiring and maintaining a stable merchant base. Our loyalty platform and unique swipe technology work with any POS terminal in the market today, enabling programs to quickly launch and scale and providing merchants of all sizes with tools to measure ROI."

For the last four years, Nietech has been managing a similar initiative, CommunitySmart, in Sonoma County, Calif. Consumers swipe the initiative's cards at more than 175 retail locations. And participating merchants donate cash back to the schools or nonprofits chosen by consumers.

Summit State Bank is a sponsor. It has overlaid the program onto its MasterCard Worldwide debit and credit portfolio, enabling donations and consumer rewards through its bankcards, as well.

Communities soaring

This POS service looks like a boost for all parties involved, especially locally owned businesses, which are prime prospects for ISOs and MLSs and the communities they serve.

"Money leaks out of a local economy many ways," Ramer said. "The terms 'leaky bucket' and the 'multiplier effect' help people grasp the impact that their purchase choices make."

Ramer provided an example: When Wal-Mart Stores Inc. enters a market, it typically derives 84% of its business from pre-existing businesses within the local community. Studies show only $13 of every $100 spent at a Wal-Mart stays within the local community.

The same $100 spent at a locally owned business retains $45 within the community. This number is greater if the products purchased are locally made, he added.

"Connecting what matters most with our purchasing patterns gives us an easy way to act on our values," he said. "Community sustainability is an issue that affects each of us and our neighbors. Paying a fair price, as distinct from the lowest price, is a way to support economic reliance and sustainability."