Building the ValiDeck MVP
The ValiDeck platform will allow customers to participate in unlimited merchant loyalty programs without requiring them to acquire another loyalty card or share their personal and confidential information with the merchant. Current merchant loyalty programs require customers to acquire a co-branded card (aka Loyalty Card) or register their email ID/phone number with the merchant when enrolling. This allows the merchant to track customer transactions at its store or within its partner network. There are two problems with this approach.
The first problem is that when a customer shares their private and confidential information with the merchant, there is a risk that the information might get into the wrong hands. Additionally, the customer has to accept the burden of managing another card. The second problem is that a card-based loyalty program provides a merchant with very limited visibility of the purchasing habits of the customer. For instance, a customer who has acquired a Starbucks loyalty card only provides information about their purchases at Starbucks. The same customer might be visiting many different eating places, such as Barista, Pizza Hut, and McDonalds, and the consumer spending at these places would be of interest to Starbucks in order to diversify its menu. However, since this spending is hidden from Starbucks, it can only speculate about the customers’ eating choices.
The following section describes how we will develop and implement the MVP design with a small group of businesses. Our MVP will comprise a payment transaction simulator and a simplified version of our unified technology platform. The ValiDeck concept is deeply connected with the tokenization process. Therefore, we’ve initiated a conversation with a token service provider (TSP) with the technological infrastructure to assist us in developing and implementing the MVP. In our production design, we’ve assigned the responsibility of tokenization to the payment card issuer. This will take some time to happen because the PCI standard will need to be amended to allow this specification.
Vendor Selection
To provide merchants with greater visibility of the customers’ purchasing habits across stores, the ValiDeck MVP will select merchants with complementary offerings. For the MVP, our plan is to work with 25 merchants in Food & Beverage, Consumer Electronics, Apparel, Personal Grooming, and Home Renovation and enlist five merchants from each category into our program. When a customer purchases from a merchant within the same category, the customer’s transaction record will be shared with the same category merchant (provided the customer has joined their loyalty program and given their consent to share the transaction record). This will mean that a Food & Beverage vendor (e.g. Starbucks) will be able to see the customer’s spending at Barista, Pizza Hut, McDonald’s, and Subway. Existing merchant loyalty programs do not provide this feature, and the ValiDeck program will, therefore, be a huge differentiator.
Acquiring the ValiDeck Account
Customers will be able to acquire a ValiDeck account for themselves by providing a ValiDeck MVP partner with two pieces of identification. This could be a passport, driving license, social security card, health card, etc. An MVP partner will be a merchant who has signed up with ValiDeck to deploy a customized Point of Sale (POS) device. The ValiDeck POS will allow merchants to request the payment card token of the card used during a purchase transaction. When the merchant receives the token, the POS will link the token with the customer transaction record and save both pieces of information on the ValiDeck platform.
When a customer visits a ValiDeck MVP partner with its identification documents, the partner merchant will record the customer information in a database managed by the Token Service Provider (TSP). The TSP will be an external entity responsible for creating a Unique Customer ID (UID) and tokenizing each payment card shared with them by the customer. It will be legally bound to keep all customer information confidential. The TSP will work as a bridge between the merchant and the payment network. Every customer transaction at a ValiDeck MVP partner will route via the TSP.
When the TSP receives the customer information from the merchant, it will generate a UID that it will share with the customer. The customer will create an account on the ValiDeck platform with the UID provided by the TSP.
Tokenizing Payment Cards
To tokenize their payment cards, customers will share their payment card details with the TSP and request tokenization. When the TSP receives the card details, it will create a token for the card, encrypt it with the ValiDeck public key, and store it in their database as a Key:Value pair. The encrypted token will then be transmitted to ValiDeck. This will ensure that the tokens can be decrypted only via the matching private key available on the ValiDeck platform. At the ValiDeck platform, the token will be decrypted and stored in a queue. ValiDeck will then send a notification to the TSP, which will notify the customer that the token is available for registration. The notification message will contain a URL to register the token.
Registering Tokenized Cards on ValiDeck
Customers will be able to register tokens into their ValiDeck account using the URL provided by the TSP. The TSP will send a different URL for each payment card requested for tokenization and allow the customer to register as many tokens as needed.
Joining the ValiDeck Merchant Loyalty Program
Payment card tokenization will allow a customer to join the loyalty program of any of the merchants enrolled in the ValiDeck MVP program. Customers will be able to register with the loyalty program at the time of making a purchase or by sharing their ValiDeck account information with the merchant. When a customer joins the loyalty program, all of its payment card tokens will be linked to the merchant loyalty program. A customer could use any of its payment cards or even a QR code containing its ValiDeck account number to earn reward points/cashback for its purchases.
Linking Tokenized Cards with Transaction Records
Tokens will be linked with the transaction records of any merchant participating in the ValiDeck MVP program. When a customer makes a payment with any tokenized card, the POS will request authorization and the token number linked to the card. The acquiring bank will forward this request to the TSP. The TSP will be responsible for fulfilling the request for the token number but will forward the authorization request to the payment network. The payment network will forward this information to the card issuer. When the card issuer authorizes the transaction, it will communicate to the payment network, which will send the authorization to the TSP. The TSP will look up the token number corresponding to the card and forward the authorization and the matching token number to the merchant via the acquiring bank. The merchant’s POS will then call a ValiDeck API to link the encrypted token number with the transaction record and transmit the information to ValiDeck. At the ValiDeck platform, the token number will be decrypted and stored in the customer’s account along with the transaction record.
Getting Rewards/Cashback from the ValiDeck Merchant Loyalty Program
The ValiDeck merchant loyalty program will allow customers to earn rewards/cashback for their purchases at the merchant and also for sharing their transaction data with other merchants. Since merchants selling products and services of the same category (e.g., food and beverages) will benefit from learning about the shopping behavior of their customers across stores, they will offer rewards/cashback to customers for their transaction data. Customers will receive their reward points/cashback in their ValiDeck account and will be able to use them until the duration of the MVP program. ValiDeck will transfer any balance reward points/cashback into the customer’s account upon the commercial launch of the program.
Recovering Lost ID and Resetting the ValiDeck Account Password
Since the ValiDeck platform will not store any personal and confidential information about its users (e.g., email, phone number), it will not be possible to recover a lost password or User ID via the platform. To reset a password or to recover a lost User ID, the ValiDeck user will visit the TSP and submit a request to reset the password or recover a lost User ID. The TSP will look up the user information in its database and forward the user request to ValiDeck. When ValiDeck receives the user request from the TSP, it will generate the URL to reset the password or recover a lost User ID. This information will be shared with the TSP, which will subsequently provide the information to the ValiDeck user. The ValiDeck user will be able to recover its lost ID or reset its account password with the information.