From wikipedia:
Hayes Valley is a neighborhood in San Francisco, California, between the historical districts of Alamo Square and Civic Center. Victorian, Queen Anne, and Edwardian townhouses rub shoulders with boutiques, restaurants, and public housing complexes.
In November 2008, to fight a worsening recession, Hayes Valley started to print their own money with the Hayes Valley Money rewards program. Here’s how it works:
shop at any participating merchant for a chance to win a Hayes Valley Money card good for $5, $10, or even $20! You can use your reward card in the shop where you got it or at any other participating store. Just look for the “money card participating merchant” signs in store windows or refer to the list below. Hayes Valley Money rewards cards are good for 30 days
This is currently a very low-tech endeavor: to prevent forgery, the money cards are signed by hand by each merchant at the time they are given to customers, together with the expiration date. “We are currently 16 merchants participating in this program and we all know each other, so it would be very hard for someone to forge” explains Russell Pritchard of the Hayes Valley Merchants Associaton.
Russell explained that so far, he has been a bit disappointed by the number of merchants joining the initiative (16 so far), but he has been really encouraged by the reception from customers. So far, out of the 30-40 rewards he has given out, only several came back from other merchants, most likely because people haven’t used them. He may typically give a $10 reward for a $100+ purchase and may a $20 reward for a $200-500 purchase. But he said, and this is interesting, that it happened that he actually gave away some of them to some people he knows shop locally or were considering buying a piece of his store.
From a “backend” standpoint, the rebate collected by merchants are simply counted and returned to the issuing merchant. Rusell acknowledged that the easy-to-setup adoption of a paper/signature-based system has drawbacks in terms of tracking and clearing between merchants, but it’s a start.
Russell hopes that this initiative will be duplicated all over the city with the support of the city of San Francisco. He personally handed a rebate card to mayor Gavin Newsome, who has been personally supporting local shopping during the holiday season, and recently reminded him that he hadn’t used it yet.
My comment
Because the rebate issued is not re-circulated after it has been used once, we cannot strictly talk about a currency (currency comes from current, something that flows). In the current model, merchants are essentially injecting their own money into the neighborhood, creating an incentive for visitors to shop at more than one store in the neighborhood in a short period of time. I suspect this model might lead some of them to think that they might give more than others do.
The next step in my opinion would be to move to a real currency model where received rebates could be used by businesses to trade with one another. In this scenario, the rebates received by a merchant would not be returned to the issuing merchant, but simply used to trade with another merchant. It might not make sense in a community of 16 merchants, but if the community is big enough and involve a wide variety of business types, it will.
Still, there would be something missing in this model: no community value would be created. One way of doing so would be for merchants to donate some of their rebate cards to local community services that would be then use them to fund their activities by using them, or reselling them for hard dollars to local residents willing to make a donation, but without losing purchasing power.
Parallel with Play it foward Akoha cards
A tweet from @akoka picked my attention today. The original idea is for customers to thank each other with rewards cards and propagate good karma, but there is a possible connection between the Hayes Valley Money rebate cards and Akoha cards: stores could easily leverage the Akoha awesome tracking infrastructure to print cards, hand them out to customers, track through which users and which merchants they have been through.
If the merchants themselves play them forward, until the cards they issued are returned to them, as I suggested above, they could effectively measure how many transactions they have incentivized through their rebate cards.
Last, merchants could also easily connect with customers without ever asking them their email or contact information, since Akoha users typically register the card on their Web site to keep a tally of karma points they have accumulated by passing the card along.