Attention conservation notice: A silly idea about gamifying credit cards, which would be evil if it worked.
To make a profit in an otherwise competitive industry, it helps if you can impose switching costs on your customers, making them either pay to stop doing business with you, or give up something of value to them. There are whole books about this, written by respected economists1.
This is why credit card companies are happy to offer rewards for use: accumulating points on a card, which would not move with you if you got a new card and transferred the balance, is an attempt to create switching costs. Unfortunately, from the point of view of the banks, people will redeem their points from time to time, so some money must be spent on the rewards. The ideal would be points which people would value but which would never cost the bank anything.
Item: Computer games are, deliberately, addictive. Social games are especially addictive.
Accordingly, if I were an evil and unscrupulous credit card company (but I repeat myself), I would create an online game, where people could get points either from playing the game, or from spending money with my credit card. For legal reasons, I think it would probably be best to allow the game to technically be open to everyone, but with a registration fee which is, naturally, waived for card-holders. Of course, the game software would be set up to announce on Facebook (etc.) whenever the player/debtor leveled up. I would also be tempted to award double points for fees, and triple for interest charges, but one could experiment with this. If they close their credit card account, they have to start the game over from the beginning.
The fact that online acquaintances can't tell whether the debtor is advancing through spending or through game-play helps keep the reward points worth having. It's true that the credit card company has to pay for the game's design (a one-time start-up cost) and the game servers, but these are fairly cheap, and the bank never has to cash out points in actual dollars or goods. The debtors themselves do all the work of investing the points with meaning and value. They impose the switching costs on themselves.
My plan is sheer elegance in its simplicity, and I will be speaking to an attorney about a business method patent first thing Monday.
1: Much can be learned about our benevolent new-media overlords from the fact that this book carries a blurb from Jeff Bezos of Amazon, and that Varian now works for Google.
Posted at January 22, 2012 10:15 | permanent link