NEW YORK, March 2, 2015 /PRNewswire/ -- Synopsis
Debit card issuers use loyalty and reward programs as tools for
customer acquisition and retention, as the programs provide scope
to deepen banking relationships and generate revenue. A number of
challenges, including regulation, have limited issuers' ability to
fund reward and loyalty programs through interchange revenue.
Loyalty programs have become highly commoditized, leading to
perceive falls in their values by consumers, and compelling debit
card issuers to re-evaluate their strategies and adopt new loyalty
solutions.
Changes in technology, regulation and consumer behavior influenced
the evolution of debit card loyalty programs during the last
decade. Loyalty programs are maturing in many countries, rewarding
customers' overall banking relationships, rather than just debit
card spending. Products such as overdrafts, direct debits, utility
payments and savings accounts offer room for increased revenue
generation for banks, compensating for lower interchange fees
earned from debit card spending. Both issuers and card schemes are
partnering with airlines, hotels, resorts and retailers to offer
merchant-funded rewards. In addition, banks have increasingly
focused resources on core banking, due to rising pressure on
profits. Consequently, peripheral activities such as marketing and
loyalty programs for debit cards are increasingly being
outsourced.
Summary
The report provides insights into the changing dynamics of debit
card loyalty programs:
- It analyzes market opportunities and consumer preferences for
debit cards.
- It explores emerging loyalty models for debit card customers.
- It discusses the impact of technology such as advent on of mobile
payments on loyalty and cost.
- It captures the impact of changing regulatory dynamics.
- It explores key strategies deployed by debit card issuers.
Scope
- This report covers top-level data of global debit card use and
comparative market shares of debit and credit cards.
- It includes top-level review and forecast data (2010–2019) for
debit card use in selected markets.
- It provides comparative analysis of key loyalty programs in
selected markets.
- It covers recent and expected regulatory changes affecting debit
card loyalty programs in key markets.
- It includes case studies to highlight industry best practice and
market trends.
Reasons To Buy
- Gain understanding of the changing landscape in the debit card
market. Can debit card loyalty programs offer similar incentives to
credit card loyalty programs
- Understand how market leaders are modifying loyalty programs in a
highly challenging and competitive market
- Deep dive into market trends to understand if your organization
requires a shift in its loyalty model.
Key Highlights
- The expansion of banking services and improvements in card
payment infrastructure have increased the scope for debit card use
in emerging markets; lower interchange fees and general aversion to
credit cards also support its use in both developed and emerging
markets. The average ticket prices of debit transactions are also
increasing, as consumers use debit cards for higher-value
purchases, prompting issuers to revisit debit loyalty programs,
despite lower interchange revenues per transaction.
- Regulatory pressure on interchange and merchant service fees on
debit card transactions has increased across the world. The US, the
European Union, Australia,
India and China, among others, have capped interchange
fees for debit card transactions. The Durbin Amendment which
lowered interchange revenue on debit cards in the US prompted a
number of large banks, including Bank of America, JPMorgan Chase
and Wells Fargo, to retract their loyalty programs for debit card
customers.
- The structure and dynamics of debt card loyalty programs are
changing: banks finding themselves with squeezing interchange
revenues are switching to merchant-funded loyalty and reward
programs. There is also increased focus on lowering the programs'
costs through the use of mobile apps, online banking and social
media.
- Banks are expanding the scope of their loyalty programs; during
the review period, focus changed from transactions through debit
cards, to the overall activity of a customer's current account. For
example, customers are being encouraged to use other fee-generating
services such as overdrafts, utility payments and priority payments
to generate revenue to offset income lost through lower interchange
fees.
- Banks are also adjusting loyalty programs to adapt to the
changing market environment. This includes the discontinuation of
expensive product lines such as airline affinity programs on debit
cards, restructuring the number of reward points that can be earned
per transaction, and the points required to redeem rewards.
Read the full report:
http://www.reportlinker.com/p02673504-summary/view-report.html
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