Foursquare to charge merchants as it ups focus on revenues

Foursquare is planning to charge its more than 500,000 registered merchants to use the sites service.

Foursquare is planning to charge its more than 500,000 registered merchants to use the site’s service as the check-in service seeks to boost revenues from its growing user base amid increasing competition in the location space. Foursquare co-founder Naveen Selvadurai says that while its business services are now free, the firm sees an opportunity to monetise the user data it holds, although he refrained from setting a date from when the site would start charging. Foursquare’s merchant services enable companies to claim a venue, run local deals and see analytics via a dashboard. While many analysts have questioned the value of services such as Foursquare to merchants, Selvadurai claims that registered businesses are now seeing a return on their investment, while users are able to take advantage of the deals on offer.

“Now we’re able to close that circle,” he tells the New York Post (NYP). “[The check-in] comes back to me in forms of recommendations. It goes back to [users] in interesting ways.”

Foursquare has previously concentrated on growing its user numbers and developing its service, with Selvadurai admitting that this remains the firm’s “core focus”. However, investors are clamouring for Foursquare to reveal a business model, and live up to its USD600m valuation. Foursquare has hinted in the past that it is looking at a number of revenue streams, including taking a cut of deals offered by firms and advertising. The service has recently inked a number of deals with daily deals platforms including LivingSocial, Groupon and Gilt Groupe, which include revenue sharing provisions. However, it is not known how big a cut Foursquare is taking from these deals, while some agreements, such as the one it has with American Express, have no revenue-sharing element.

Working directly with businesses via merchant accounts arguably gives Foursquare a better shot at generating significant revenues and reaching profitability. The accounts enable businesses to take advantage of customers using Foursquare to check-in to their store, providing firms with information such as popular times of the day as well as allowing them to offer deals and special offers to people who check-in. A number of big brands, including Starbucks and McDonalds, are signed up and offering deals, alongside thousands of smaller, more local firms. Foursquare’s progress in signing up merchants bodes well for its ability to generate significant revenue, although charging merchants for services that they have previously got for free could be a hard sell. However, if Foursquare were to offer a greater range of services to paid accounts members, and better analytics, merchants may be prepared to pay.

“The [merchant] tools… are free night now, but it’s obviously very valuable data,” says Erin Gleason, Foursquare’s media liaison, speaking to the NYP. “So in the future when it’s a little more robust we see the potential to monetize that.”

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