Using ID-card as a loyalty card

Allikas: eid.eesti.ee

Using ID-card as a loyalty card


Overview

An ID-card can be successfully used for customer identification within loyalty card systems. In comparison with a magnetic stripe plastic card based solution, an ID-card based solution is cheaper in implementation and utilization costs. Ease-of-use of the ID-card based solution is also greater compared to the magnetic stripe based loyalty card solution.

The ID-card based loyalty card system is in principle similar to the analogous magnetic stripe loyalty card system. However, because vendors do not have to deal with issuance and replacement of cards, there is no need for realization of the foregoing processes.

The use of an ID-card is also slightly different from a magnetic stripe loyalty card – when a magnetic stripe loyalty card is usually handed to a shop assistant who connects the card with the transaction, then in case of an ID-card, a customer usually uses an ID-card reader device (either a special ID-card reader or a point-of-sale terminal) by themselves.

An ID-card is already used as a loyalty card by several companies. For a customer, an all-in-one card is definitely more convenient than carrying a number of different loyalty cards along. The only restrictive problem that can be brought out is the fact that despite the obligation of ID-card possession, there are a significantly large number of people who do not have it.

Purpose

The main purpose of using an ID-card as a loyalty card is to significantly simplify and expedite loyalty card issuance. Pending on the size of a company’s customer base, it could give great financial savings.

This chapter uses the magnetic stripe plastic card solution as a reference because compared to chip card based loyalty card systems, it is the most common and cheapest in Estonia.

The principles of the loyalty card use are relatively similar to magnetic stripe plastic cards – when purchasing, a customer presents an ID-card, and then the purchase is connected to their customer account. But unlike magnetic stripe cards, an ID-card is inserted into a card reader by a customer.

There are no production and issuance processes involved with an ID-card. A customer registration process is related to amount of information that is needed about the customer during the registration. If name and personal identification code is enough, then the customer registration process could be automatically carried out in the course of the sales transaction.

The ID-card based loyalty card system has following advantages:

  • The solution implementation costs are significantly lower. There is no need to produce large amounts of cards or acquire relatively expensive personalization devices (i.e. machines which are used for stamping customer’s name and card number on a card).
  • The solution is more reliable and expenses involved with special membership card hardware are lower. Nowadays, a chip card reader is cheaper than a magnetic stripe reader. Besides, in many cases a point-of-sales terminal can be used to read an ID-card. Reliability of the magnetic stripe readers is worse; the information stored on cards degrades in time.
  • A magnetic stripe card must be swiped through a reader with a right speed; therefore usually a customer service officer carries it out. In case of an ID-card, the officer is no longer involved.
  • Basically there are no loyalty card management processes. In case of regular cards, it is necessary to elaborate card issuance and extension work processes; also resources have to be found for these processes.
  • Data quality of customer database is guaranteed.
  • The solution is highly secure, thereof various value-for-money bonus systems, including voucher and credit schemes, could be realized. Whereby risks conditioned by card falsification are improbable.
  • The loyalty card system easily enables to realize a web-based self-service environment. In case of a regular loyalty card solution, a vendor undergoes problems like assuring secure customer authentication in web environment – especially when personal identification code was not asked from a customer at card issuance.
  • There is no need to manage adequacy between a customer and his/her loyalty card number (which may, in turn, change each time a new card is issued) – customer’s practically constant personal identification code can be used as a customer identifier.

Solution description

The ID-card based solution comprises the following logical components (presented are only components that are inevitably required within the ID based solution):

  • There is an ID-card reader or a point-of-sale terminal with an ID card reading functionality at every checkout counter.
  • Cash register software. Cash register software must have an interface for an ID card use – to control either an ID-card reader or a point-of-sale terminal. A regular point-of-sale terminal interface of cash register software is not enough when the terminal is used as an ID-card reader; it definitely needs an ID-card control support.

Customer registration could be directly implemented by cash register software – customer’s name and personal identification code is deciphered and immediately connected to a customer account. It is advisable to use a personal identification code as a customer account’s unique identifier.

Challenges

The greatest principle disadvantage of the ID-card based solution is that a customer must already have an ID-card or at least an Estonian personal identification code. However there is a regulation which reads that all non-citizens, who have Estonian residence permit, must possess a residence permit card which is electronically compatible with an ID-card.

A more complex nature of the card may cause problems to vendors – its handling assumes either a specialized ID-card support in a cash register system or this support should be developed there. Therefore implementation could be difficult in cases where foreign software, which normally does not have an Estonian ID-card support, is used as a cash register system. However, taking into account financial saving achieved from card issuance costs, such additional development generally pays off very quickly. Also, there is enough cash register software produced in Estonia that already has the ID-card support.

Action plan

Inculcation of the loyalty card solution contains the following actions:

  1. Analysis. It has to be found out whether the existing cash register system has the ID-card support. When point-of-sale terminals are used, it is worth examining whether the terminals also have the ID-card reader support (some terminals offered in Estonia already has the support built in). As a result of the analysis phase, comprehension must be achieved on the following points:
    1. Necessary software upgrades in a cash register system for the realization of the ID-card support – must found out in cooperation with a cash register system provider. If cash register software already has the ID-card support, then necessary development work is generally not needed.
    2. Devices for ID-card reading – whether a point-of-sale terminal or an ID-card reader. The choice depends on either point-of-sale terminal capacities or cash register software capacities.
  2. In case of a point-of-sale terminal - whether the realization of the ID-card support for the terminal is necessary; the cost of the realization must be found out. It is necessary to ascertain that the selected solution would also be usable with the cash register system.
  3. Carrying out cash register software development – necessary when a cash register system does not originally have the ID-card support. In general terms, the development should be carried out by the company that has elaborated the same cash register system; therefore it is impossible to estimate the work content, which depends on the structure of particular cash register system software.
  4. Ordering the ID-card support software development for a point-of-sale terminal – when it is decided to use a point-of-sale terminal and it does not have the ID-card support. If it is impossible to develop this particular support to the point-of-sale terminal, separate ID card readers must be used in the solution.
  5. Purchasing ID-card readers – when it is decided in favor of separate ID-card readers. Most IT applications stores sell ID-card readers, unit price is around 10 euros.
  6. The solution installation at points of sales. A setup of one cash register for ID-card reading takes at most one hour (except for cash register software installation).
  7. Performance testing. Different ID-cards, both new and old ones, must be definitely used within the testing.

Time expenditure of the action plan and activities is in strong correlation with the existing cash register system capacity. If a cash register system already has the ID-card support built in, then only software tuning might be necessary and additional software development works are not needed.