Friday, June 7, 2019
Lazlo 326 LLC, a fintech startup, received a patent for a new way of sharing, validating and redeeming stored-value products online and at the POS. The core patent, issued June 6, 2019, covers the company’s Crypto Imaging technology, which enables service providers to embed electronic coupons, tickets and rewards directly into videos, memes and GIFs. These fully digital products can be transmitted by text and easily loaded onto connected devices, eliminating the need for physical cards and tickets, according to the company.
Lazlo CEO and cofounder Chris Demetree said the solution is currently in pilot, with additional retail and lottery rollouts planned. Noting that U.S. annual spend in gift cards, lottery and event tickets is more than $250 billion, Demetree said, “Crypto Imaging changes the rules by enabling new ways to consume, create and share value. Our data is embedded into every pixel in an image that can’t be emulated. If someone tries to duplicate the image, the picture may look identical but the true data behind the image is encrypted and embedded.”
Demetree pointed out that the technology pairs unique user IDs with contextual data to facilitate real-time offer messaging while users remain anonymous. He called this a true digital experience for consumers that is comparable to what they experience today. “The only difference is today you present a physical card and in our model a screen will be scanned,” he said. “When consumers register, they select their preferences, but the system doesn’t track their personal information.”
In the lottery industry, low-tier claims, described as those that are $599 or less, are paid to the first person who claims the ticket. High-tier tickets require winners to go to a lottery office, Demetree noted. Lazlo app users would have the ability to receive a file on their phones, and the lottery office would have the keys to decrypt the file, he stated.
Gift cards could be processed in a similar way, using Lazlo’s platform integrated into a retailer’s POS system. The embedded QR code would kick off a call to the company’s servers and validate the voucher on the Lazlo system. If a retailer wants to run their own validation, they could push back down to the POS, Demetree added.
“Most of the gift card networks are single direction outbound; ours is a bidirectional network,” he said. “When there’s no embedded code in a gift card, a low-tier ticket can be copied and redeemed two or three times at different registers. This will help to eliminate fraud.”
“The migration to digital gift cards, tickets and coupons has fallen short of its potential because it was defined by the same thinking that created paper and plastic,” said Mike Pinkus, president, CTO and cofounder at Lazlo. “Crypto Imaging enables an entirely new method of distribution for stored value-one that fits naturally into how we communicate and share today.”
The Atlanta-based fintech company was named after fictional character Lazlo Hollyfeld in the movie Real Genius who excelled in math and entered numerous sweepstakes, calculating his odds of winning at 32.6 percent. Pinkus said he expects the patented technology to significantly improve on those odds by creating new revenue opportunities for retailers, brands and state lotteries while improving the customer experience.
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