The idea behind technology startup Eftplus was born out of frustration that's only experienced by an addict who's been denied their "fix". When self-confessed customer-rewards addict and all-round tech guy Julian Cox had to turn down a loyalty card offer because his wallet was already stuffed full of them, he realised he had stumbled on to what was probably a common first-world problem.
Together with his Eftplus co-founder, entrepreneurship masters student Marcus Hoefliger, he set about finding a solution.
"We asked ourselves what's the one card we take out and use on a regular basis and the answer was our payment cards," says Hoefliger. "Why couldn't we just use our payment card as loyalty cards?"
The idea of linking payment cards to loyalty programmes is not new. Several companies have tried to do this before, Hoefliger says. But previous attempts have foundered as they failed to comply with strict Payments Card Industry (PCI) security standards, which are designed to prevent payment card details from falling into the wrong hands. Unless you are a financial institution with bullet-proof security then storing or transmitting full payment card numbers is an absolute no-no.
Eftplus' innovation was finding a way to identify transactions and use them to power a loyalty programme without breaking PCI rules.
"We managed to find a way to securely identify a card, who it belongs to and then reward them based on their activity," Hoefliger explains.
Cox and Hoefliger discovered the raw data Eftplus needed was already available in the reports the bank-owned payment network provider Paymark was sending out to retailers.
These reports contained details of daily transactions including the merchant's identifier and, critically, a stripped-down version of the customer's card number.
Once Eftplus had persuaded some local Dunedin retailers to share this data, the company had all it needed to get its cardless loyalty programme service up and running.
Eftplus began by building a basic reporting tool, which would give retailers insight into how much their customers were spending and when.
Soon after, the fledgling company received a phone call from Paymark, New Zealand's largest electronic payments provider.
"They had noticed we were redirecting data from merchants in Dunedin and wanted us to come up to Auckland 'to have a chat'," says Hoefliger.
After the Eftplus founders outlined their vision to Paymark's senior managers, they were "right on board", he says. "It was what we could do with the data; how we could bring it to life, that was what they were really interested in. It was a breakthrough moment for us."
When Eftplus launched its loyalty programme in late 2011 it immediately proved popular with small businesses, especially firms in the hospitality industry.
Part of the attraction for customers is that it is "frictionless" compared with physical loyalty cards, says Hoefliger. "The customer just does what they usually do to pay for a beer or fix up a bill. They spend $200 on Friday night and then on Saturday morning they get a message on their phone that says: 'Thanks for coming in last night, we appreciate your custom, here's a voucher for $10'."
Eftplus rapidly grew to 150,000 members and was processing around 14 million transactions, but to progress it needed capital and expertise, so it approached the Auckland-based Ice Angels investor network at the end of last year.
Eftplus immediately caught the eye of Ice Angel Peter Hall, a former ASB manager who had led the bank's True Rewards loyalty scheme. Hall, who has since joined Eftplus as its investment director, says he was attracted to the firm because "it solves the major pain points in loyalty".
Eftplus also picked up Ice Angel Steve Lobb, the founding general manager of the Fly Buys loyalty scheme, who also turned out to be a customer through a restaurant he owned.
He is now Eftplus' chairman.
Produced in conjunction with the Angel Association of NZ