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Loyalty at the center of Sionic Mobile's proposition

In many ways, Sionic Mobile is the anti-Pay when it comes to today's mobile payments marketplace. Mobile Payments Today recently conducted a Q&A with Ronald Herman, the company's founder and CEO, to get his thoughts on the current state of the industry.

November 16, 2015 by Will Hernandez — Editor, NetWorld Media Group

In many ways, Sionic Mobile is the anti-Pay when it comes to today's mobile payments marketplace. 

While Android Pay, Apple Pay, Samsung Pay and PayPal grab the media headlines, Atlanta-based Sionic Mobile flys under the radar despite its presence at more than 100,000 national retail and restaurant locations as well as 50,000 fuel retailers and convenience stores nationwide. The company's bread and butter is small businesses, but it also has partnerships with large retail chains such as Banana Republic, Gamestop and Gap. 

At the heart of Sionic Mobile's offering is the Ion Rewards app for consumers. In July, the company released the latest update to an app that now includes an interactive user interface, a two-tap checkout process and instant, real-time rewards for every purchases completed using the app. 

Sionic Mobile also plans to add two more features for merchants in addition to its longstanding loyalty program: the ability to accept a card payment with a smartphone's camera, thus eliminating the need to use something such as Square, and the ability for the merchant to deliver a digital receipt to a paying customer.

Ronald Herman, Sionic Mobile's founder and CEO, revealed to Mobile Payments Today another forthcoming merchant benefit thanks to a new partnership with merchant services provider Chase Paymentech. 

"We're going live with a flat rate from Chase for the entire ION marketplace and every one of our merchants," Herman said. "What that means is, interchange rates are gone. The flat transaction fee starts at 70 cents, and we expect it to reach the low point of 20 cents as early as January or February, with steps in between."

The following is a Q&A session Mobile Payments Today conducted with Herman last month: 

MP: How does Sionic Mobile view the mobile payments space today?

RH: For us, we're really excited about what's happening in the top-tier level of mobile payments starting last October with Apple Pay, and the recent introduction of Android Pay seems to be getting some interesting press. With Samsung Pay, I think the whole LoopPay acquisition was such a brilliant move on their part. We love to see the big boys duke it out, and, hopefully, they're paying attention to what their customers and consumers are saying. For us, we think the payments space is just starting to take shape.

MP: How does what the "big boys" are doing trickle down to Sionic Mobile?

RH: They're kind of paving the way for us. Our focus is, and even if you look at our app and might think otherwise, squarely on the small-business sector and with enterprise being our follow on. Quite candidly, the small business folks are telling us that they're not really excited about the big boys because they don't understand them and it’s more equipment. They're so reluctant with EMV that they are also reluctant to embrace the big guys. For us, it's a good awareness piece. It's great that they're doing it from the top down and we're going to stay focused in the small business sector where we think we're going to do well.

MP: From the beginning, Sionic Mobile has positioned itself as a loyalty/rewards app first, while mobile payments is a means to the end of the transaction. Do you think that approach as worked for the company?

RH: When we founded this company, we realized pretty quickly that a lot of businesses just can't afford to pay interchange and have a reasonable customer loyalty program, let alone everything else that goes along with mobile marketing. We started [back in 2012] with Dwolla because of their very low-cost payment structure and it was really appealing. In that environment, we could eke out a small living for ourselves, provide a crackerjack loyalty program, and keep the interchange out of the equation. We've always positioned this as, if we can make room in the marketplace for us for a small marketing fee, and make sure the loyalty aspect is seamless for our customers, then we have a winning proposition.

MP: How has Shop2Give (Sionic Mobile's e-donation feature) evolved?

RH: We very recently made the decision to separate Shop2Give from ION Loyalty for a lot of good reasons, but that platform as a whole is specially earmarked for very large non-profits. The existing system that we have in place today will be migrated to the ION system and we'll have a donate feature where supporters can shop and dine and do what they normally do within that app and then have a trigger that automatically donates their loyalty rewards to that non-profit. That's a much easier way for us to do it and the non-profits that love the Shop2Give, some of them will start branding it on their own. 

MP: Overall, how have merchants responded to Sionic Mobile's offerings?

RH: We're in the fourth generation of this platform, and each time we release a major update, it seems to resonate really well with merchants, and best with the small businesses. For example, we've put in about $1.5 million the past six months into a very intricate fraud prevention program, which we believe is one of the reasons why Chase Paymentech was so excited about working with us. As a result, there is no chargeback in our model. It doesn't exist in our business operation. A lot of the small businesses that face chargebacks are gravitating very nicely to our platform. 

MP: What are a couple of trends we should be looking out for heading into the holiday season and into next year?

RH: We are already seeing an increase [in holiday shopping trends]. In fact, week-over-week, we are starting to see unsually heavy activity, a little earlier this year than we even did last year. Lowe's is an obvious one because they’re going into the fall season and people are winterizing their homes. We're also seeing a big upswing in Gap and Banana Republic, and Sephora. I’m anxious to see what happens this year, but we're expecting a significant uptick in revenue in that.

I’m anxious to see what happens with Macy's. I think that environment might be a little bit more conducive to a PayPal mashup. I’m going to be watching what happens with Plenti, as well as MCX and CurrentC.

iStock photo.

About Will Hernandez

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Will Hernandez has 14 years of experience ranging from newspapers to wire services and trade publications. Before becoming Editor of MobilePaymentsToday.com, he spent two years as the content manager for PaymentsJournal.com, a leading payments industry news aggregator and information hub published by Mercator Advisory Group. Will spent four years covering the payments industry as an associate editor for multiple publications in SourceMedia's Payments Group based in Chicago.

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