SAN FRANCISCO (Reuters) - LivingSocial, the second-largest daily deal company behind Groupon Inc <GRPN.O>, plans to launch its first credit card in coming months to help merchants attract repeat customers, Chief Financial Officer John Bax said on Thursday.
Card holders who make 10 purchases a month with the card will earn 10 credits known as Deal Bucks. These can be used to pay for LivingSocial daily deals and other offers the company runs, such as discounted travel packages, Bax explained.
For merchants, LivingSocial plans to offer short-term funding through the program. Bax declined to give details, but he noted that co-branded credit card and loyalty programs usually offer features such as deferred interest payments and rewards for spending with merchants.
"We will use this as a platform to encourage people to come back to merchants," Bax said. "Small and medium-sized local businesses will never be able to have their own credit card or loyalty program. We will be able to bring them the benefits of that."
The daily deal industry has been criticized for encouraging consumers to visit merchants only when big discounts are available, making them less likely to become full-paying return customers.
Groupon and LivingSocial have been working on incentives for consumers to return to merchants after deals are run.