Google acquires QR code-based startup Punchd

Punchd, a smartphone-based loyalty card business, has been acquired by Google for an amount believed to be more than $10 million. It is widely speculated that Google will use the service as part of its Google Wallet mobile payment system.The way Punchd works is simple: smartphones scan a QR code to virtually redeem a “punch.” While it’s good for customers who don’t have to carry around paper cards, it also gives local business some useful information about their customers, including how many times the code has been scanned and keeps track of repeat customer business. Customers are also alerted via email when a loyalty reward becomes available. It's basically the digital version of the the “Buy 10 Get One Free Card” offered by coffee shops and supermarkets. It’s easy to see where it fits into Google’s overall strategy. Groupon competitor Google Offers is going live soon, representing the search giant’s play for the local commerce market. And if Google can come up with a smart integration, Punchd could complement the upcoming Google Wallet NFC payment system.

The six-person Punchd team will begin work at Google's Mountain View offices. TechCrunch reported that “the Punchd team isn’t simply being absorbed by Google to work on other projects — it’s going to continue working on Punchd full time, and that the service isn’t going anywhere.”

Of course, there’s another possibility: As GigaOM notes, Punchd’s team consists of some savvy Android software engineers, and this could just as easily be a talent grab.

But writing on VentureBeat, Jitendra Gupta, founder and CEO of Punchh, a social loyalty and referral platform for local businesses takes a different spin. He states, “Executives … are slowly coming to the realization that to have customers use mobile payments, they need to provide real incentives to customers and merchants. With the Punchd acquisition, Google is looking to solve the customer adoption problem. … when merchants provide a digital punch card with real rewards to their customers, customers use the service in large numbers. In fact, at some of our client locations, we have seen 4x the usage of a traditional paper or plastic loyalty card. … The big idea here is that once customers and merchants start getting real value from these mobile-based digital and virtual programs, getting them to switch to a mobile payment card from their digital wallet is a whole lot easier than asking them to switch to mobile payments directly.”

This is Google’s 14th acquisition of 2011.

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Norm Bond
NORM BOND shows people how to use digital marketing tools to find customers, grow sales and increase profits. And if you're not using digital tools he shows you how to do that too. He currently splits his time between Bangkok, Thailand and the U.S. He is available for consulting and speaking.
Norm Bond

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