Incentives Company Young America Says Open-Loop Cards Make Better Rewards

by Mercator Advisory Group 0

Young America, a loyalty company, says that using open-loop cards as rewards will draw in more customers than closed-loops cards, but retailers need to ask recipients to spend those cards back at their stores.

Customers respond better to retail offers that include general use prepaid cards rather than closed loop gift cards, according to Young America, an engagement marketing, loyalty and incentive firm. Customers are more likely to purchase products at a store that presents an open loop reward, yet retailers have struggled to get customers to spend back those rewards at their store.

While the company says it offers a program that will induce more consumers to bring their cards back to the store, prepaid incentives cards will face pressure from the new rules that the Federal Reserve has written as a result of the Durbin Amendment. These rules regarding transaction routing may make the open-loop incentive card business a tough one to be in for most issuers.

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