The Australian fintech startup’s mission is to “make every loyalty programme in the world a good experience for customers and merchants, and to be the go-to global platform for loyalty and offers”. Here’s how.
Terry McMullen has spent his entire career in loyalty and marketing, first with American Express and then later joining a startup called Pinpoint in 1991 where he was the 12th employee until he left in 2014 after the company’s sale to Mastercard.
It was no surprise therefore that after spending two years “in the wilderness” following his exit, he would re-emerge in the same space. “I felt one glaring problem had still not been solved – how to earn and burn in one step within one app,” said McMullen.
“At Pinpoint, we were working on loyalty and offers and one big problem I could see was that for every programme, the consumer had to have a card, code or coupon, but it was very difficult for them to use them easily.
“When you consider that there are more loyalty memberships in the world than there are people, this is a huge market. There are 6b in Asia alone and 10b globally. In Australia, you have 25m population and 60m memberships and in the US, there are six loyalty memberships per adult.
“It’s clear people love these programmes, what they don’t love is fiddling with cards and coupons and even bringing it into the digital age doesn’t solve this problem – you still have a two-step process with every loyalty app, open the app, show your card – and that two-step is an engagement killer.
“It’s an even bigger hassle for the merchants who have to capture the details, match the transaction and integrate with frequent flyer programmes, for instance.
“This is a big global industry with a big pain point.”
By coincidence, while he was mulling over this pain point, he met three like-minded individuals (Ian McKenzie, Debra Taylor and Nigel Lovell), who were in the process of forming a company and after discovering common ground, McMullen was invited to become co-founder and CEO of OpenSparkz at the end of 2016.
OpenSparkz is essentially a fintech platform for loyalty and payments that allows consumers to earn and redeem their points in one step within one app and removes friction and cost for companies with loyalty programmes. Visa and Mastercard are among the first two credit card programmes to be integrated with the OpenSparkz platform.
It is clearly on the right track. Even before it showed any revenues, it recently secured US$1.5m funding in an over-subscribed second seed-funding round, led by Louise Daley, deputy chief of Accor Hotels Asia Pacific, who invested privately and will sit on the OpenSparkz board.
The funding has given it the much-needed fuel to scale. To date, the company, which has a team of 11, has raised $2.5m and it is targeting to raise Series A by mid next year.
“We are going from startup to scale,” smiled McMullen. “Last week, we posted our first revenue, in October we will launch with a retail mall in South-east Asia and by Christmas, we will launch a cash back offer in Asia.
“Our platform is ready, our demo product is ready, the integration with Mastercard and Visa has been completed globally and we’ve got PCI-DSS compliance which is a very rigorous process.”
Asia is clearly a priority market with each market offering different opportunities. Japan, for instance, pointed out McMullen has a goal to move from 25% card payments to 40% by 2025. “There’s a national attitude to digitize the payment experience and you can see this happening in the market with various companies incentivizing consumers to do that with offers.”
McMullen, who divides his time between Sydney and Singapore but sees a day when he will eventually relocate to Singapore as the business scales, is also proud of the fact that OpenSparkz was accepted into the Mastercard Start Path global programme in 2018. “We were only the third Australian company to be accepted, it’s a pretty tough programme and it does two intakes of 10 startups a year.”
Likening OpenSparkz to “the Intel chip in your computer, it’s invisible but it helps the computer run really fast”, he said, “Our mission is to make every loyalty programme in the world a good experience for customers and merchants, and to be the go-to global platform for loyalty and offers.”
OpenSparkz offers what McMullen calls “success-based pricing” – that means merchants pay a fee per transaction.
Given his years of experience – “I’ve been around the block” – he’s not naïve to think that it will be plain sailing ahead. “While card linking is fairly nascent – it is only recently that companies have made data available – and there’s no one in Asia doing it yet, we know that’s not going to last forever.
“We are not competing directly with any loyalty programmes, we are more the platform that powers the programmes, so say Alipay which is a closed loop ecosystem could use our technology or Grab. We are creating a platform that they can sit on.”
McMullen also sees his experience as an advantage in this space. “The good thing about being at my life stage is you develop a certain pragmatism, there are no stars in my eyes about being a unicorn.
“Being more matured founders and having more than a century of experience between us, we can see the clearest and quickest path to get to where we want to go. Hopefully we have made a lot of mistakes and learnt from them.”
• Featured image credit: SARINYAPINNGA/Getty Images