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On October 18th, 2011 at 1:00pm ET, RewardsNOW will be hosting a webinar, How to Leverage Loyalty in a Tough Economy: Special Post-Durbin Insight for Financial Institutions & Why Now is the Time to Launch a Loyalty Program! Loyalty 360 had the opportunity to hear from presenter, Steve VanFleet CEO, President, RewardsNOW Inc., as Steve shares his philosophy and insights on the impact of the Durbin Amendment on today’s loyalty marketplace.
Loyalty 360: What marketplace conditions led to the development of the Durbin Amendment?
The merchant concerns over what they viewed as escalating and unjustified debit interchange rates has been around for many years. Anyone remember the “Walmart suit”? Simply stated, the legislators in Washington were on a tear to limit financial institutions ability to charge for many things and the merchants used the opportunity to ride on the coattails. By moving so quickly though, they ended up with a poorly thought out result, regardless of which side of the issue you are on.
L360: Who will be most affected by the conditions imposed?
Clearly FI’s over ten billion in assets, and merchants with a high percentage of signature based debit transactions.
L360: What types of institutions can benefit from launching a loyalty program in the “Post Durbin World?”
All institutions can! The goal of loyalty programs - to encourage profitable behavior - does not change with the imposition of these rules. What may change are the behaviors desired and the underlying financial assumptions, but loyalty programs these days can be much more flexible and tailored to address a wide range of objectives and financial models.
L360: To some, it may seem that the simplest solution is to eliminate any existing debit rewards programs. Why is this not a good strategy? Why are loyalty programs even more important today as a result of this new legislation?
In some cases eliminating or cutting back a debit rewards program may be the right answer if viewed in isolation. But institutions over ten billion (regulated) will need to view the world more holistically and derive a program that drives the behaviors desired with the corresponding reward/incentive. FI’s under ten billion (exempt) have a window of opportunity to take advantage of a legislated financial model that can support rewarding for behaviors that can drive revenues, draw in new customers, and increase retention.
L360: How will the consumer feel the impact of the Durbin Amendment?
Despite all the rhetoric, I believe there will be almost no impact at the POS. Merchants have less reason than ever to direct transactions one way or the other as the differential for Pin vs. signature for the vast majority of cards is much less meaningful. Consumers of course will in some cases see fees imposed on basic checking products and incentives instituted to drive other desired behaviors such as the use of credit cards.
L360: What new marketplace trends or technologies do you see having a positive impact or influence in the “post-Durbin World?”
The long avoided migration to a chip replacement for a magnetic stripe in the US, though still a long road, will make many of the issues today less important. The costs surrounding fraud will drop, as well the method of authentication will become standardized. This, in conjunction with the expanding use of mobile platforms as the replacement for carrying plastic cards around will provide for a very dynamic environment where many of the current battles will not exist. These would have occurred with or without “Durbin”, but may eventually be much more impactful.
L360: What is your customer engagement and loyalty philosophy?
Simply stated, in order to drive the behavior you want - customers need to be communicated to in a manner that is relevant to them in content, is relevant from a timing perspective , and is communicated through a channel that speaks to them. Of course, at the center of all of this must be benefits they believe in.
A loyalty program is a post-Durbin must-have. With the Federal Reserve Board’s recently released final regulations for debit interchange, this is an opportune time to talk about what these rules mean for financial institutions that have loyalty programs. Even if you are not a financial institution – the webinar, How to Leverage Loyalty in a Tough Economy: Special Post-Durbin Insight for Financial Institutions & Why Now is the Time to Launch a Loyalty Program! will be extremely valuable as you will learn how loyalty programs can work to engage consumers and provide a revenue stream for your organization.
Don’t miss this opportunity to hear more from Steve and gain crucial insight into how best-in-class businesses are leveraging loyalty programs during this time of change.
Would you like more information about the Durbin-Amendment before the webinar? Hear more from Steve VanFleet, in the recently released whitepaper from RewardsNOW, “FAQs about The Durbin Amendment and the Resulting Opportunity for Loyalty Programs.”
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