Have you ever bought a gift card or prepaid phone card? If so, then you’re already familiar with the concept of a “closed loop payment network.” With this payment option, you basically purchase a pre-loaded card that can only be used within specific environments — i.e., that particular retail store or mobile network.
The concept isn’t new, but thanks to the rise of smart devices, many merchants and retailers are taking the concept one step further by leveraging mobile technology.
What exactly makes closed loop mobile payments different from other closed (or even open) loop payment options?
Using their phones, customers upload money into a dedicated account linked to a specific retailer. As is the case with a standard gift card, those funds can be used only at that store. Because the entire interface happens through the phone, customers are able to manage their accounts on the go. They can:
Whereas open loop payment networks, such as Apple Pay®, are tied to a user’s credit card or bank account, closed loop systems work only at specified locations, such as the Starbucks® app.
Speed, security, and control are just a few of the benefits that customers receive from using closed loop mobile payment systems. A merchant that accepts this option benefits from:
If you need help getting started with mobile payments or gift card programs, connect with a representative today.