Evan Schuman's StorefrontBacktalk

Around January of next year, 10 major retail chains will be testing a way to have coupons associated with a shopper’s specific payment card. The reductions will then be automatically deducted from the total purchase with no effort—not even a button press—from the store associate. The trick with this trial is that the marriage of card and coupon, along with the automatic reductions, is done by the processor.

If this approach works—it’s already been tested with much smaller merchants—the potential is for payment cards to be associated with anything that the full-blown digital wallets have promised: giftcards, loyalty programs, stored value, etc. The processor handling the cloud magic is First Data and the lead vendor is RetailMeNot. The key question, though: Is funneling all of these goodies through a single processor going to fare better than doing it through a single phone (Google Wallet), a single card (Visa), a single payment type (PayPal) or the carrier (ISIS)? Even Apple’s payment-less digital wallet hasn’t generated nearly the buzz that a typical Apple rollout does.

The way RetailMeNot will work with the 10 chains in January is not necessarily the same way it handled the small merchant trial of the program, which happened this past March at the SXSW show in Austin.

The small merchant trial had shoppers hitting the RetailMeNot site and choosing from a list of coupons, which they then associated with one or more payment cards. When a shopper entered his or her payment-card data on the RetailMeNot site, a secure card capture widget from CardSpring actually handled that process and then routed the information to First Data. First Data then turned the data into a token—it’s TransArmor package—and it was sent back, said Sarah Owen, a First Data product vice president.

This approach has its pros and cons. From the perspective of RetailMeNot—and any retailer that tries something similar—it provides a much easier PCI approach, because the data is theoretically never available to RetailMeNot.

On the con side is the fact that if the alliances break up—for example, if First Data and RetailMeNot chose to not work together anymore—it might be difficult for RetailMeNot to access all the card data. So all the coupons associated with all those customer cards might not be known. It’s the quintessential tradeoff: Gain more PCI security by giving up control of the data.

Another issue—at least for the initial launch next year—is the limitations on the types of offers the system can make. A top priority for RetailMeNot is to make this process as close to effortless as possible for store associates. If that can be achieved—and it seems quite doable—it would mean no associate training and no initial POS hardware or software changes.

“It’s our desire to make this as seamless as possible. We don’t plan to have the associate do any authentication,” said Matt Howitt, RetailMeNot’s VP of Engineering. “The associate’s workflow has to remain unchanged. The challenge is to increase the intelligence of the processing network.”

To accomplish that, RetailMeNot will sharply limit the types of coupons that can be used.