I really don't think badges/ or any gamifciation is necessary, KISS. Isn't winning a free coffee after buying 10 coffees enough motivation to use the product. I really don't think the problem is convincing users to adopt its going to be getting businesses to adopt. If I see 10 places I frequent often all using this app for their loyalty program.. then I think its pretty obvious I would use it to.

Indeed, you nailed it on the head. Signing up venues is the hard part; they do the leg work to sign up customers. There's a vested interest :)

Integration with Facebook, foursquare, and twitter. A lot beyond that, but it's a little premature to talk about it right now ;)

No game mechanics, right now we're focusing on real rewards. We'd love to add some gaming layer, but it can't be some sort of tack-on feature. It needs to be a fundamental part of the product, and we haven't figured out a great way to do that yet.

I think this works without all those extras, providing a real service without having to turn it into a game to keep people interested. Seems to be a lot of cross advertising potential, kind of like "You frequent x, you might be interested in y close by, get your first .... free"