Reward Programs Remain Integral to Success of a U.S. Credit Card Market in Flux

by Mercator Advisory Group 0

More granulardistribution of rewards will become the norm, as the industry faces increasedcompetition for mature transactors and emerging new transactors.

This will be true for private label retailcards, as well as global credit cards as issuers focus on utilization.

“The degree to which cardholders are rewarded is animportant issue facing the industry. The answer will be driven more andmore precisely and selectively by the return that cardholders generate for cardplayers based on how much cardholders spend, where they use their cards, andwhether they are willing to pay for better rewards. It’s a quandary thatis already being addressed by the marketplace, but will also continue to shapethe industry in the future as reward programs become less egalitarian withlarger returns in percentage terms dictated by cardholder behavior. The’losers’ in the rewards game will be lower spending and higher risk cardholders,whom the market has already deemed marginal returns on investment,”comments Don Montuori, publisher of Packaged Facts.

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