Exploring the possibility of a Rideshare currency in the SF Bay Area

Something I have been thinking about lately is a good use case / pilot for an Open Money currency in the San Francisco Bay Area. Although there is considerable effort spent discussing and developing currency tools, I feel there is a huge deficit of economically viable use cases for these currency platforms to be actually used.

After a discussion with Michael Linton on a Community Way Ridesharing project proposal he made to Credit Mutuel in France several years ago in 2008, I’ve given more thoughts to how it could be applied in the SF Bay Area. This is a topic I’d like to discuss on our next weekly SF Bay Area Open Money conference call.

There are several reasons why carpooling/ridesharing seems to be a good use case for Open Money:

  • Casual carpool shows that drivers are willing to pick up unknown passengers at a few known locations to benefit from free toll and getting across the Bay Bridge faster during rush hours. So, perhaps if drivers were given something of value in exchange for rides, they would be offering more rides.
  • Most cars during rush hours on major Bay Area highways still transport only one passenger, despite the fact that Bay Area residents are quite environmentally aware.
  • It is in the interest of companies to promote carpooling amongst their employees.
  • Public transportation is slow and if you take your bicycle on the train, it’s increasingly difficult to find a spot for your non-folding bicycle.
  • There are now location-aware ride sharing applications available on the iPhone/Facebook, which address the scheduling issue. See Carticipate or Carpoolworld.com.
  • Medium to long-term, gas prices are likely to go much higher, giving additional incentives for car sharing.

So, let’s go about this problem by asking questions: first, why do we need money to solve this carpool problem?

The main issue is that there is not always mutual benefit in sharing a ride. If riders need rides, it’s usually because they don’t have a car, which means that a mutual credit solution would not work: riders would quickly get large negative balances that they would not be able to repay by giving back rides to other people. So, drivers will expect to be rewarded with something else then a ride. I’m assuming here that most drivers will not go through the trouble of offering rides if they get nothing in return (some may be satisfied with accumulating these credits and donating them, but not most of them). Also, there are many Bay Area no-toll commuting routes where they would not be direct a benefit for the driver to offer a ride.

Why canshouldn’t drivers charge conventional, government-issued money?

Some web services such as Ridester do so, and the Craigslist ridesharing section contains many posts with offers to pay cash.

The main issue with using conventional money is that it does not account for the wealth created to the local community as a result of using ride sharing. The fact that someone is willing to use a ride share instead of using their own car has positive benefits for the community they live in, such as less cars on the road leading to less traffic and less accidents, as well as better air. For companies, it means less need for parking spots and more parking available.

The other issue ismay be taxation. If ride shares are offered in conventional US$, revenue will have to should be reported taxed (in practice, I’m told nobody does). If ride shares are offered in a dedicated currency in units of dollars, what it means is that it can only be used to get rides, which facilitates reporting and opens doors, with appropriate lobbying and political action, to legal tax deductibility at some point.

Why not use tax incentives or publicly-funded non-tax incentives?

Yes, one way of accounting for this wealth would be for local policymakers to offer tax incentives for those provided trusted reports of ride shares. There are actually tax incentives program such as TransitChek or CommuterCheck that allow for employees to receive up to $230 per month of tax free income as vouchers to be used to pay for local transit services. Unfortunately, as far as I know ride sharing programs do not qualify for TransitChek, only vanpools do, see for instance this program, which provides cash incentives for corporate vanpools.

Another way is to use public funds to finance non-cash incentives for those providing ride sharing. Here are examples of such programs in the SF Bay Area: the 511 Rideshare Reward$ program and the UCSF vanpooling incentives. These programs give gift cards for groceries, coffee or gas in exchange for reporting carpooling activity. There are several problems with these programs:

  • The main problem with these programs is that they are very limited in scope: the 511 Rideshare Reward$ program is only targeted at new carpoolers (if you are already carpooling or have participated in the program in a previous year, you can’t anymore – After that, there is still an opportunity to participate in the Spin the Wheel program, which essentially gives just a chance to win, but that isn’t a very strong incentive).
  • Another problem is that these programs are very underfunded: according to this article, the total amount of incentives financed is very low (roughly $16,000 in 2007).
  • Another problem is that eligibility requirements and reporting is time-consuming/clumsy: all participants to the carpool must register and report, but it does not seem that it can be conveniently done at the time of the transaction itself, which would be ideal.
  • The last problem is that the gift certificates mentioned in the program are for Amazon, Safeway and Starbucks, which may not be the best way to promote local business in the SF Bay Area.

Note that it seems that vanpool programs are more funded than ride sharing programs because they do not pose a threat to car sales revenues as ride sharing does (if you use vanpooling during the week, you still need a car during the WE). This is what this article argues. Maybe the combination of incentives is part of what explains why so many corporate vanpools have appeared on SF Bay Area highways in the last few years.

Looking for another solution: a rideshare currency.

There are many interesting elements in what I covered so far, but corporate vanpools aside, just driving on SF Bay Area highways shows that ride sharing adoption can still be improved.

As I mentioned in the introduction, a possibility might be the use of a ride share currency denominated in dollars and issued by participating businesses.

Businesses would issue them to their employees as benefits and would redeem them to whomever buys goods/services from them up to a limit % of the total transaction. For instance, a business might give every month $200 worth of ride-sharing $ to an employee instead of, say a US$100 raise in salary. To a given customer holding these rideshare dollars, for a US$100 transaction, they might accept as much as $20 in rideshare dollars. Besides employee loyalty, and conservation of US dollars in this time of recession, the benefit for businesses would be to advertise that they accept this currency as a way to attract these rideshare-friendly customers and promote their image as environmentally-friendly businesses (accepting these rideshare dollars might be particularly attractive to car-related businesses such as gas stations, garage, oil changers). As they collect these rideshare dollars, businesses may be able to re-circulate them for goods/services from other participating businesses, re-gift them to their employees, or perhaps even donate them to a non-profit of their choice that would use it to transport volunteers around or raise US dollars by auctioning them off.

Participating businesses might group into a ridesharing coalition to seek the rideshare dollars to qualify as income tax exempt just like the TransitChek or CommuterCheck.

Reporting would be greatly simplified by the use of a cellular phone-based platform for trading these rideshare dollars (maybe via a platform like Twollars or TwitBank), ideally integrated with existing payment networks for multi-currency (US$ and rideshare $) transactions at participating businesses.

A benefit of using an Open Money currency would be full transparency and integrity: at any moment, the sum of all rideshare $ account balances would always be 0.

Beyond the tradable rideshare currency – dealing with reputation

Beyond the tradable rideshare currency that is earned by giving rides and can be redeemed for goods/services at participating merchants, a reputation “currency” might be useful as well to rate riders’ experience of drivers and vice-versa. This is something most ride sharing Web services already do.

Making it practical

Besides the convenience of payment and the incentives for participants, I feel the biggest hurdle is practicality of carpooling/ridesharing.

On this topic, the way casual carpooling could be an interesting inspiration or template: the way it works is that those in need of a ride know exactly where to get one and those drivers who are willing to give a ride know where to pick up riders.

Perhaps the solution to carpooling is to set up casual carpool points at various well-known locations such as BART stations and provide riders and drivers ways to notify in real-time demand/supply at each location, possibly starting with only two locations, one in SF and one in Palo Alto for instance. Cars could advertise whether they are able to carry bicycles or not and riders would similarly advertise whether they have a bicycle or not (most riders would probably since we are talking about fixed drop-off/pick-up locations).

Conclusion

Bringing a currency platform is an important condition of the emergence of new currencies, but finding ways to use these platforms to solve real-world problems is even more important. It seems that ridesharing is an interesting use case that might benefit from the creation of a dedicated currency.

What is a currency?

This is the basic question that came up on a Flash Meeting titled “Open Money for Beginners” organized by Christophe Ducamp last Sunday. This is also a question that Eric Harris-Braun, Art Brock and I ended up discussing on a conference call last Friday night. So, I decided to take a shot at it, knowing that not everyone will agree at first, but hoping I can start a constructive debate and that we can agree on a definition at some point.

Etymology

One angle to start with, is etymology:

  • In English, “currency” comes from L. currentum, pp. of currere “to run”.
  • In French, the translated word is “devise”, which is essentially a motto, something you stand for, a rule you live by. In French, we have two words that are closer to the English word: “monnaie courante”, which means the money that is widely accepted.
  • In German, the translated word is “Währung”, which according to the wikipedia page comes from a word that means “warranty”, but may also be from the verb “währen” which means “to last”.
  • In Spanish, the translated word is “moneda”, which according to the etymology, means a coin minted with the mark of the issuing authority, which gives credit to its value.

So, three languages focus on the currency as something whose value is ensured by the reputation of its issuer. Only the English word derives from the consequence of this quality, which is that it flows easily between people.

Attempted definition

A currency is a means of payment denominated in a unit of value, issued, marked and ultimately redeemed by an issuer who guarantees (“backs”) its value. This guarantee is a function of the issuer’s reputation. The stronger the reputation the more the currency will be accepted and flow.

Why a currency is not a unit of value – See discussion between Chris Cook and Thomas Greco on P2P Foundation wiki.

Examples

Airmiles are backed by the airline company’s ability to redeem them for flights.

Twollars backed by EisoMac Ltd and sponsors’ commitment to donate one US$ for each donated Twollar.

Hours at time banks backed by the commitment of participants to deliver on one hours of their time.

Can we go beyond this definition?

There are many people that are streching this definition.

Supporters of the meta currency project, according to my understanding, view the above definition as restrictive and unable to correctly address forms of wealth that are not tradeable such as health. On this topic, I think that although I can’t trade my health, my heath or health-related activities can be tracked, and these have values to the welfare system I participate in. For instance, if I don’t smoke and I can back it up via a reputable issuer (either a doctor or a trusted device), that fact has value to the welfare system (less cost to them down the road) and could be the basis of a health currency.

Other examples given by the meta currency project are: right to vote. Voting can be viewed as something issued to each voter for a particular ballot and that they redeem to the issuer when voting. There is indeed some flow of wealth here, backed by the ability of the issuer to implement the voted proposition, but voting rights cannot be transfered. School grades are another example. I see these processes as reputation-building processes that in turn can back a currency, but not as currency themselves.

I have also heard people like IdentityWoman talking about identity infocards or as a currency. This is a topic I have addressed in a recent blog post. I don’t think that my “date of birth” or “email” is a currency b/c if I issue 10 tokens that can be redeemed for it, without accountable privacy policies, one party redeeming it devalues it for the 9 other token holders. Plus having more than 1 token is useless. Plus I only want the person I share it with to redeem it. On the other hand, I can see possibly how a blogger could issue tokens denominated in blog posts or tweets that could be redeemed by the holder to access restricted content on the blog.

In online multiplayer games, there are currencies that are not use to trade goods with other players, but that can be only exchanged with the game itself. An example is influence, which some games dispense quite generously and are a parameter to the success of some operations in the game. But obviously, these games operate in a virtual context that do not have the limited resources of our real world, so that may be not such a problem.

What is your opinion? should the world currency be kept to something that can be used as a form of payment in a trade, or should it be used in a wider variety of social contracts/games/processes? more importantly, will it help people understand and adopt new currencies or will it make things more complicated and backfire?

Striving for Meaningful exchanges

I spotted an ad for some photographic equipment for sale on Craigslist this morning that had the following post-scriptum:

I have to make rent and times are tough. So make an offer.

And this morning in my taxi, next to the “No Check” sticker, a yellow sticker woud read:

I am Self Employed Independent Contractor. I’d appreciate your repeat business.

One way to look at this is that it is a form of “Authentic Marketing” but I prefer to describe it simply as adding meaning to transactions, in the above cases: helping someone possibly unemployed, or rewarding someone who is contributing via its small business to a wider diversity.

These are examples that while exchanges are fundamental for mutual wealth, exchanges aren’t just about money. Exchanges preceded money, and even when first monies appeared, it was not uncommon for multiple of them to exist concurrently, each with its distinct role, or meaning. Money as we know it today (standardized, government issued) has had a huge objectifying influence on our subjective values, an effect that authors like Georg Simmel have described as completely objectifying and alienating. Others, more recent, authors like Viviana Zelizer in her book The Social Meaning of Money argue that subjective values have had a largely underestimated influence on our money as well, with people relying on a variety of techniques to give back social meaning to the colorless government-issued money, such as using different jars in their household for different uses. To Zelizer, under the surface of a single fungible government-issued currency, people use what amounts to a myriad of different currencies: they all flow differently even though they are all denominated in dollars.

In other words, old habits die hard and humans strive for meaning in everything they do, something the game designers try to satisfy as much as possible in their alternative worlds. As people look to compensate for less transactions with more meaning per transaction, we ought to see a wide range of solutions that will help them do just that.

Without going to a different currency, one example based on the above could simply be for users to expose part of their identity (unemployed) to a trusted party in a way that guarantees buyers on Craigslist that their money indeed goes to a person who is unemployed, and not someone deceiving to get an unfair advantage. That trusted party does not need to be an institution, but simply a social network.

If we think in terms of a new currency, one thing to keep in mind is that while money is a very powerful leverage tool, it is not what will drive people to exchange. A currency does not enable exchanges, it facilitates them, and one way it can facilitate them is by having built-in meaning.

BarCampBankSF2

We just released the PR for BarCampBankSF2. Please re-blog, re-twit, re-send, …

Dear Innovators,

It’s been a year since we had the first BarCampBankSF at the UC Berkeley campus — and given the current state of the economy, the collapse of the stock markets, the credit crunch hitting the global markets and the issuing severe slowdown of activity — the timing couldn’t be better for a second BarCampBankSF.

BarCampBank aims at bringing together the Bay Area’s smartest technologists and industry insiders from all over the world for a great day of networking to discuss the impact of emerging technologies in the Banking and Financial Services space. BarCampBankers will present projects, confront ideas and participate in lively conversations around the innovations in the Banking and Finance world. If you are an innovator, a technology disruptor or a professional in the banking and finance industry we’d love to have you join the debate and share in the experience.

We believe that innovation happens in any economy. We’d love to hear your ideas and share how your organization or institution is doing to ease the financial mess we are in right now.

Regards,

The BarCampBankSF Team.

More info and the wiki for the event can be found at http://barcamp.org/BarCampBankSF2
Registration takes place on eventbrite: http://bcbsf2.eventbrite.com/

Open Money Foundation update and logo

The Open Money Foundation is gathering interest.

I’ve discussed the idea to a variety of people in the last few weeks, ranging from virtual world developers to Web developers, community currency activists and gold currency advocates, and there is a strong agreement towards a very focused and simple goal of currency services interoperability.

This simple goal has to be viewed as a first and necessary step to realize the larger vision of Open Money or free currencies. In particular for community currencies, another cornerstone are economically-driven adoption models such as Community Way.

Open Money Foundation mission

In a nutshell, Open Money Foundation should define the OpenID of currency services:

Open Money = a set of open interface specifications designed for adoption that governs the interoperability between independent currency services and client applications.

Note that this is not restricted to community currencies currencies. We think World of Warcraft virtual gold coins, phone airtime minutes, digital gold currencies, Linden dollars or any virtual currency can benefit from this interoperability. Conversely, we think that community currencies will benefit from the participation of virtual/game/alternate currency providers.

A currency service that complies with Open Money Foundation specifications will enable the following benefits for end-users:

  • automatic discovery of currency services on the Internet.
  • one click currency registration request: users will be able to very easily request to join a currency service from their favorite currency application (“wallet”?).
  • single view of all currency balances: users will be able to view all their balances at various currency service from their favorite Open Money-compliant currency app.
  • transacting on any currency service from any Open Money compliant app.
  • starting a new currency on an existing currency service will be as easy as starting a group on Facebook (this is specific to credit currencies such as community currencies)
  • and more.

The goal of these specifications isn’t to re-invent the wheel. There are many open specifications to leverage to address some of the problems above (OpenID, OpenSocial, OAuth, OFX) and some currency systems already leverage these.

An important aspect of the suggested focus is to not focus on implementation but only on interfaces. In the case of a currency service, implementation is for instance how creditworthiness and credit limits are determined, or whether interest or fees are charged. An interface is simply: how do I request to the currency service a demand for credit. There are many advantages to focus on interfaces not implementation:

  • We don’t get into the philosophical discussions of what is a currency, what are its characteristics, etc.
  • We can each focus on our area of expertise: some on client applications that make it easy for users to use the currency, some on server scalability, some on currency design, etc.
  • We leave an opportunity for implementers to differentiate themselves and address various community requirements, either as a generic platform with a currency definition language or as an ad-hoc currency service for a specific community, either as a not-for-profit, or for profit.

Besides offering a forum for the development of these specifications, the Open Money Foundation will channel funding for the development of an open source reference implementation that everyone can at least use to test their own implementation, or build upon.

I’m looking forward for feedback on this topic. If you like these goals and are interested to participate in a way or another, please comment.

Open Money Foundation logo

Here’s a possible logo I’ve been working on several WEs ago.

Open Money Foundation logo

Thoughts on a Twitter Time Bank with multi-currency support

Today, Eiso Kant, the co-founder of Twollars announced that he had been working lately on a multi-currency version of Twollars, and that “soon everyone can start their own currency on Twitter”. This could be an interesting development for Twollars, which have so far acted as a multiplier and allocator of the generosity of the sponsors US dollars donations: Twollars are backed by commitment of sponsors to donate real US dollars to the charity of the donator’s choice (the first $1,000 was sponsored by Eisomac Ltd, the creator of Twollars themselves, and it seems they are now looking for a new sponsor for the next $10,000).

We will have to wait until more details emerge, as there are many different ways a multi-currency platform could be implemented.

In the meantime, I’d like to share some thoughts on the concept of a Twitter Time Bank, something I’ve been thinking about in the last few days.

Overview

The goal of the Twitter Time Bank is to allow people to bring the reality to the idea that “time is money”, and allow anyone to issue their own time-based money they can use to pay others for products/services or to donate to others.

Here is an example of how it would work:

“(from @glebleu) give @receiver 1 hr for …” would give the receiver the right to schedule 1 hour of my time with him/her/them, through an operation called “redeeming”. Alternatively, they could transfer the time/money I gave him/her/them to someone else via the following Tweet: “(from @receiver1) give @receiver2 1 @glebleu hr for …” (receiver1 gives one hour of glebleu to receiver2).

Give syntax

Anyone is free to give their own time money to anyone else they want for whatever reason they want. They can give as much as they want (but there is an obvious limit, as each person’s time is limited). Anyone is also free to transfer other people’s time money they received to someone else. Here is the syntax:

Short syntax (@giver = @issuer) “give @receiver 5 hr ….”  or  “give @receiver 10 mn …”

Long syntax (@giver <> @ issuer) “give @receiver 5 @issuer hr” or “give @receiver 10 @issuer mn”

units supported: hr or mn

Accept syntax

Although you are free to give your time money to anyone for something, they are also free to acknowledge it or reject it. Acknowledgment would be done via the following Twitter syntax:

Short syntax: (@issuer = @giver) “accept 1 @giverissuer hr for …”

Long syntax: (@issuer <> @giver) “accept 1 @giver hr from @issuer for …”

Creating fungibility with community currencies

“Fungibility is the property of a good or a commodity whose individual units are capable of mutual substitution.”

Personal time money is hard to get accepted, obviously. With the above scheme, each time you are given some time money, you need to review the issuer for the value of his/her time to you and his/her creditworthiness.

To make personal time money useful, we need to make it fungible, but obviously all people’s time is not fungible. It is only within specific groups/communities that it may be.

To create mutual substitution, we need to allow people to spontaneously mutually agree to make their time money substitutable with one another. This agreement is a currency. In Twitter terms, @user1, @user2, etc. create a community whose currency is for instance called #bernal (say for the Bernal Heights neighborhood in San Francisco to support neighborhood “barn raising” events). In the community currency configuration, the community admin can decide:

  • how people can be accepted in the community (ex. unanimous vote, cooptation from a minimum number of existing community members, verification of affiliation, etc.)
  • the limit on each community members’ un-redeemed issued time.
  • whether the currency can be sold for US$ to highest bidder (note that there is no way to prevent it from happening, so it’s better for the process of buying/selling currency for US$ to happen in a way that can be tracked and users protected from theft).

Once this is set up,  community members can issue community currency backed by their own personal time money. For instance, if I’m a member of #bernal, when I tweet “give @receiver 1 #bernal hr for…”, I automatically have an additional @glebleu hr that is accounted for in my un-redeemed issued time. If I exceed the personal issuing limit set for my community, the issuance is rejected (the received can’t accept it).

Web service

A Web service would provide a Web version of give and accept actions, as well as the following actions:

  • reports:
    • un-redeemed issued time,
    • un-redeemed (but scheduled) issued time,
    • total redeemed issued time
  • search profiles of people that you can redeem your personal money or community currency with
  • request redemption (schedule time & location, or redeem for US$)
  • confirm redemption
  • bid in US$ for redeemable personal time money or community currency
  • personal profile/preferences
    • auto-accept given money (default is no for personal time money, can be configured on a per community currency basis)
    • authorize personal time money issued to be sold for US$ to highest bidder (default is no, but there is no real way to prevent it to happen)
    • community currencies joined
    • schedule w/ booked time.
    • geo location, services/products provided for 1 hr, delivery (F2F, online), etc.

Business Model

The business model would quite simply to take a % of the time money sold for US$ (the system would allow users to prevent their issued time money to be put up for sale in US$ if they’d like to).

Minsky’s agenda for reform

I just started to read Stabilizing an unstable economy by Hyman Minsky. In this book published in 1986, Minsky argues that the financial capitalist system is endogenously more prone to instability than stability and that we should reform to avoid “IT” (the Great Depression) to reproduce. In the 2008 preface, there is a summary of his agenda for reform that I found particularly relevant to the current financial situation.

  • employment rather than welfare, with the government acting as employer-of-last-resort, because employment provides more opportunity and dignity than welfare and because welfare – paying people not to work – is inflationary
  • universal child allowance
  • payroll tax elimination
  • policies encouraging greater equality of wages
  • allow retirees to work without losing Social Security benefits
  • tax policies encourage equity finance rather than debt finance
  • policies encouraging small- to medium-sized banks, with less regulation the smaller a bank is.
  • increase oversight of banks trough the use of the Fed’s discount window instead of FOMC
  • zero reserve requirements with interest-earning positive reserve balances

What a personal data currency may look like

I was challenged tonight in an email to explore where VRM and Open Money concepts may intersect.

Here are my notes:

  • To make personal data a currency, you would have to issue redeemable promises to deliver personal data to anyone “holding” the promise, say your location.
  • You may want to assign circulation rules to your currency so that it has no value outside of your social network (and you don’t end up being stalked by strangers).
  • Until redeemed by you the issuer, the currency could be exchanged for goods/services.
  • After redeeming the promise i.e. obtaining the data from the currency issuer, the promise would no longer have any value.
  • To have significant value, the currency would have to be issued by you (and ideally, certified by other parties).
  • You may want to provide foreign exchange services.

Of course, I haven’t answered the key question yet: why anyone would want to make their personal data a currency.

Evolving community currencies from barn raising

The biggest challenge of community currency adoption is probably education. People don’t understand why they would need a different currency, or they don’t trust the community currency as much as the government-issued currency.

Over at the opensourcecurrency group, Benjamin made a very exciting suggestion based on an adaption of the Amish barn raising.

With Barn Raising, we all get together
in January and break up into groups of 4-6 households. We then
schedule our work days – about one every other month – throughout the
year. When your day comes up, everyone converges on your house and you
put them to work for the day. It’s a great way to get big projects
hammered out in a short amount of time, and it’s way fun! The problem
is that anyone who doesn’t get in during that first meeting has a hard
time joining a group. I see ATEN as a way to facilitate even more of
the BarnRaising spirit without having to do all the organization up-
front. You have a bunch of folks over to your house and then pay them
in hours. Go to someone else’s house and get some of that time back
working for them, etc.

So, the idea is essentially for the community currency, here time-based, to be used as a tool to make the barn-raising more flexible.

What I really like about this idea is that it makes the community in community currency very real in a social sense: you get to meet and accomplish something with other community members.

An analysis of the CommunitySmart fundraising and loyalty program

While on a WE in the Russian River area, 2 hours north of San Francisco, my payment-obsessed eye noticed a “Community Smart Bonus Rewards” sticker on the entrance door of the Food for Humans organic supermarket.

CommunitySmart Bonus Rewards

Back home, I researched this program and found out that Community Smart Bonus Rewards is essentially a merchant-funded local fundraising program for local non-profits and community services like schools. Participating merchants set a rebate, participating customers choose a school or charity in their community that they would like to support, and for each qualifying transaction the cash value of the rebate minus a small administration fee is paid to the chosen school or charity. This reminded me a lot of Community Way, except that in Community Way, rebates are re-circulated as local currency, so they have a multiplier effect.

Merchants decide how to structure their rebates. The most common seems to be an amount or percentage based on a minimum purchase amount with an optional capped amount on each rebate, but many other options are possible:

  • a flat dollar amount,
  • a fixed percentage of the purchase amount,
  • a tiered percentage of the purchase amount,
  • an amount that is available on certain shopping days or promotional periods.
  • a special percentage or amount (to override a normal percentage or amount) on certain shopping days or promotional periods.

Participation in the program only requires merchants to have a POS terminal, and only requires customers to have either a Community Smart-registered credit card, or a CommunitySmart program card (shipping/handling fee $4.95) for customers who wants to pay by cash or check.

When paying by cash or check, customers slide their CommunitySmart program card in the POS reader. Because the card is not a payment card the payment is declined, but the information about the purchase and the amount is recorded. This method of capturing customer transaction data by routine declining of authorization requests is the core patent of Nietech, the company supporting the Community Smart service.

Nietech is a Santa Rosa, CA-based company.  According to this bizjournals.com report, their annual revenue is $750K. According to this article, they are a 14-people operation with among other customers, the Interra Project, a social commerce non-profit started by Dee Hock, founder of Visa International, and Greg Steltenpohl, founder of the Odwalla juice company with the goal to harness consumer power – 70 percent of the Gross National Product – for social change…

I haven’t had enough time to find much information about the current status and success of CommunitySmart or Interra. In 2005, Nietech reported having raised $75K for a local school in partnership with a local bank issuing their CommunitySmart card, but I haven’t found any news about a successful national roll-out. Similarly, Google News does not have much news about Interra Project in the last few years. I didn’t have much time to research and may have missed news, so if you have any information about these projects, please comment.