Tel Aviv tries out bonus system for residents with digital wallet startup Colu

Month-long project will reward consumers who buy from Tel Aviv businesses via an app; if successful, pilot could be extended to other uses, city says

Shoshanna Solomon is The Times of Israel's Startups and Business reporter

Illustrative photo of a Tel Aviv cafe (Courtesy Christopher Cafe Facebook page)
Illustrative photo of a Tel Aviv cafe (Courtesy Christopher Cafe Facebook page)

The Municipality of Tel Aviv-Yafo has embarked upon a month-long pilot project, the first of its kind in Israel, to examine the feasibility of using a “digital city currency,” serving as a reward system for people who patronize Tel Aviv businesses.

The municipality set up the pilot program together with Colu Techonologies Ltd., an Israeli startup that developed a digital wallet to enable payments at registered businesses via smartphone.

Under the pilot, consumers who engage in five transactions worth at least NIS 20 ($5.6) apiece at local businesses using the Colu app get a reward of 25 digital coins within the app. These coins are worth approximately NIS 25, and are to be used at registered stores in Tel Aviv.

The aim, the municipality said in a statement, is to strengthen the local economy by supporting local businesses, help tackle the cost of living for residents and increase the interaction between the municipality and its residents, to raise their involvement in city life and make them feel integral to its development

The pilot began on May 5 and will last for a month, the municipality said, and was launched to coincide with Eurovision events in the city.

In a second stage, said Elad Goldman, a partnership manager at the Tel Aviv Foundation, the bonus system could be used to reward residents for reporting hazards to the 106 hotline or for using public transportation. “What we have launched now is just a simple pilot, we want people to start experiencing the platform and to sign up for the track. At a later stage we will consider what other behaviors can be incentivized using the app.”

The reward system will be financed by the municipality from its marketing budget, he said.

The Colu app was chosen for the pilot by the Rockefeller Foundation, thorough its 100 Resilient Cities (100RC) program, which helps cities around the world become stronger in the face of physical, social, and economic challenges. Tel Aviv is part of the resilient cities program.

The digital currency used in the Colu app is not a cryptocurrency, nor is it based on blockchain technology, the municipality said.

In addition, during the pilot period, Colu and the Tel Aviv Foundation will donate 12 agorot (about 3.3 cents) from each transaction to the Children of Music project based at the Lev Yafo Youth Center, which uses music to empower and support youth at risk and is supported by artists in the Israeli music industry.

“We chose to launch this pilot to coincide with the Eurovision song contest, in order to help bring the benefits of such a high-profile international event to hundreds of local businesses, including those not in the city center,” said Hila Oren, the CEO of the Tel Aviv Foundation in a statement. “At the same time, it will make a real contribution to an extremely worthwhile local children’s music project.”

“Tel Aviv-Yafo follows Belfast and four other 100RC member cities to formally pilot a local currency model that directly feeds into the city’s priorities for social returns,” said Lina Liakou, managing director for Europe and the Middle East at 100 Resilient Cities.

This pilot is part of a Resilience Strategy program Tel Aviv-Yafo is planning to release in June, said Liakou, which will have “a forward-looking roadmap focused on solving for chronic social vulnerabilities through targeted short- and longer-term programs.”

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