San Diego-based Mogl has raised another $8 million to further its rewards business, CEO Jon Carder told Bank Innovation last week. Carder also revealed the company will launch an API for merchants later this month.
The round is one of the larger for a rewards startup in recent months.
Rewards is a tricky business. Companies looking to succeed in the space need to line up both sides of the market — the merchants who will fund the rewards and card issuers that will get them in front of customers. “We have to sign up merchants and banks at the same time,” Carder said. “If you sign up a bank in Kansas City, then your sales team has to focus on merchants in that area.” Otherwise, the consumer doesn’t get the value of the network.
Mogl will use its new funding — it has some $42 million in total — to build its sales team and expand its merchant network, Carder said. The company currently fields about 35 salespeople, half of its total staff.
“We recently formed 30 new partnerships,” he said. “Half are billion-dollar companies.”
Mogl serves 30 million to 40 million cardholders and has between 15,000 and 20,000 merchants in its pipeline, Carder said. In other words, Mogl’s network will now be national, rather than limited to certain regions.
The company will also launch its API sometime this month.
“This will be the first realtime, card-linked API,” Carder said.
Mogl now connects directly to the major card networks instead of intermediaries such as TSYS or First Data. Carder said this will allow benefits to the consumer such as instant alerts of offers and redemption. (“You just saved $2!”) It will also allow merchants to offer rewards based on supply and demand — an oversupply of widgets on Tuesday could lead to 10% off for consumers that days.
“With the API, there’s no need to tap into bank systems or data,” Carder said, which is the case with Cardlytics. Developing the API took Mogl about two years.
While notifications of rewards are made in real time, the actual rewards are paid out monthly to customers’ linked accounts. Version 1.0 of the service will focus on location and time, Carder said — You’re in Kansas City and it’s lunchtime — while 2.0 will develop the alerts and notifications. In version 1.0, issuers will still notify consumers of rewards via email or in their bank app, or in Facebook, or any app at all.
Mogl has made the move many similar companies have made over the past few years, moving from a direct-to-consumer play to business-to-business. “The data will get to be really precise,” Carder said. “The space is already massive without that precise data.”
And the data is coming, courtesy of your mobile phone. Precise targeting will allow “juicy rewards” of 10% to 20%, according to Carder.
“We’ve been trying to solve online to offline since the beginning,” Carder said. With 93% of commerce still offline, according to Carder, that leaves a lot of room to grow.