Google Pay is tapping Fidel, a U.K.-based startup with an API that allows developers to build products and experiences on top of major card networks, to offer cash back rewards for its users.
The merchant-funded offers that live in the Google Pay app are supported by Fidel’s API, which captures real-time transactions from linked payment cards, and enables companies to trigger real-time engagement between consumers and merchants at the point of purchase.
In a statement, Josh Woodward, director at Google Pay, suggested the offers create opportunities for merchants to deepen relationships with customers. They also create incentives for customers to increase transaction activity on their Google Pay-linked cards.
The rewards, which are offered on an opt-in basis, require no further action from the consumer. They simply use their Google Pay-linked card to earn the rewards, which are sent back through the Google Pay app and can be transferred to a chosen account.
Rewards are one of a series of use cases for Fidel’s API, which acts as an integration point to track any card in any location around the world.
To safeguard customer account data, Fidel said it relies on tokenization, which instantly encrypts personal card information, and no personal information is stored by Fidel. Google will receive data for individual transactions only when a consumer opts in to enroll their card, and enroll in an offer with a specific merchant – a double opt-in. Fidel said it has strict rules around how its clients (including Google) use customer data, and in cases where Google receives data on qualifying transactions, it is not shared with merchant partners.
“We have extremely strong tokenization SDKs for enrollment as well as throughout the process,” explained Fidel’s Vice President of Strategy Patrick Nealon. “I think where the rubber really hits the road is that when we work very closely with our network partners to get in depth and validate every single time a customer uses our dataset.”
The process for determining the merchant-funded offers is automated, he added. Google is not personalizing each offer at the individual consumer level; instead, it’s able to customize the types of offers through the connectivity provided by the Fidel API.
“[Google and the merchant] are not personalizing offers specifically – they’re customized offers on a broad level with their merchant partners,” Nealon told FinLedger. “Given Google’s weight in the ecosystem and their centrality in the consumer’s life, they can create or demand a higher or more compelling offer from a Target or a Sweetgreen or Panera than a generic offers marketplace.”
Google Pay rewards are one component of the growing Google financial services ecosystem, which will include personal finance management capabilities, and Google Plex, a mobile bank account offered in collaboration with 11 partner banks that will launch in 2021.
Additional use cases for Fidel’s API include attribution and insights; digital receipts; and expense management. Nealon said the company is also exploring disbursement capabilities, including for example, instances where insurers can deliver card-based claims instead of checks.
“[Among] the three key pillars for us going forward: one is is new geographies, the other is new use cases; and the third is we’re developing complementary products to push dollars back to the card in other opportunities that we see,” said Nealon.
Functions enabled via Fidel are likely to become expected offerings from direct-to-consumer digital financial providers, said David Sica, a partner at venture capital firm Nyca Partners, which is an investor in Fidel.
“Our belief is that the functionality that Fidel offers today will be table stakes for digital-first consumer fintech products,” he told FinLedger. “Fidel sits very nicely in this world where, if Google Pay offers this, who else has to offer it? If all the fintechs are doing it, then the incumbents also need to do it.”
Fidel, which was launched in 2018, has raised more than $20 million.