Debit Card Loyalty Programs Market Emerging Opportunities, Products and Competitive Landscape 2016 by Radiant Insights

Insight Report: Debit Card Loyalty Programs

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 merchantfunded 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.

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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

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