SAN FRANCISCO—Javelin Strategy & Research announces its latest research report — Evolving     Rewards Strategies: How Merchant-Funded Programs Will Usher in a New Era     of Loyalty for FIs.” In the wake of a weaker economy and     the recent passing of revenue-squeezing regulations, Financial     Institutions (FIs) should jettison their traditional payment card-based     rewards programs in favor of merchant-funded rewards that reduce costs,      generate revenue, and build customer loyalty. By joining forces with     FIs, merchants gain access to FIs’ transactional data to develop highly     targeted marketing campaigns. The report, based on data from three     surveys totaling more than 15,000 consumers, examines today’s changing     payments and rewards environments, presents the key strategic ways     merchant-funded rewards programs can be a win-win for both FIs and     merchants, and recommends how FIs should evaluate, implement, and     promote these programs.

With decreased consumer discretionary spending, FIs face revenue     reductions that are only compounded by new revenue-restricting     regulations. Javelin predicts that Durbin and Regulation E together will     create up to a $16.4 billion loss of annual revenue for debit card     issuers. To circumvent these losses, FIs should reassess their existing     rewards models and implement merchant-funded rewards programs, in which     merchants profit by picking up a large portion of program expenses, and     FIs are able to provide more targeted rewards to their customers.

“Consumers love rewards - almost two-thirds of consumers say that     rewards drive their payment choice,” said Beth     Robertson, Director of Payments Research at Javelin. “But FIs don’t     have to accept the status quo of traditional rewards programs. They can     offer customers a richer reward experience that satisfies their     customers, while enabling delivery of more cost-effective programs.”

Merchants also come out ahead when partnering with FIs by gaining access     to transactional data. Gaining a wealth of critical consumer purchasing     information through their rewards program relationships with banks,      merchants can promote effective marketing campaigns to targeted     consumers through multiple channels, including mobile delivery of     rewards offers.

“Look at the exploding popularity of the Groupon and LivingSocial daily     deal sites,” notes Javelin’s researcher, Aleia Van Dyke. “With access to     consumer transactional data such as demographics, location, purchasing     behaviors, and retail history, merchants will be able to customize their     offers to appeal to specific consumer groups, rather than flood the     market with generic offers. Merchant-funded rewards programs are a     win-win for FIs and merchants, as merchants gain markets, and FIs reduce     their costs.”

Selected Key Report Findings – Evolving Rewards Strategies

  • The importance and evolution of rewards programs and how rewards       influence consumers’ payment choices.
  • In-depth profiles of seven leading third-party rewards vendors that       offer merchant-funded programs: Access Development, Affinity       Solutions, BillShrink, Cardlytics, Cartera Commerce, Ed? Interactive,      and FIS.
  • How FIs - and merchants - can develop and match rewards strategies to       consumers’ behaviors, demographics, and payment preferences.
  • How FIs can utilize mobile technologies and social networks to promote       and deliver rewards programs to consumers.

About Javelin Strategy & Research

Javelin Strategy & Research is the leading provider of quantitative and     qualitative research focused on the global financial services industry.      Our extensive quantitative data and deep analyst experience enable us to     forecast the direction of the financial services market and make     recommendations that empower you and your business to succeed.


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