Rewards and Darwin – Evolution in Action

by Patricia Hewitt 0

With the announcement of the final debitinterchange rules, one might expect debit rewards programs toevolve more rapidly in the direction of merchant funded offers. Andthat would probably be – correct. However, it doesn’t take a realscientist to tease out this answer, the signs are everywhere (hint:mobile). Here are just a few results of our search on MobileCommerce Daily using the term “mobile rewards”:

• 7-Eleven is running a mobile rewards program that lets”Thor” fans check-in to any location and redeem points and rewardshaving to do with the film.
• Retailers Crate and Barrel and ProFlowers are offering discountson specific Valentine’s Day-related products to drive sales via theshopkick location-based shopping application.
• Sears Holdings Corp.’s Kmart is turning to location-based mobileinitiatives to encourage consumer loyalty and repeat purchasesduring the holiday season.
• The Wet Seal Inc. and Target are the latest retailers to tap thelocation-based mobile rewards and offers craze to drive foottraffic, customer acquisition and loyalty.
• Brookshire Grocery Co., one of the largest regional grocerychains in Texas, Louisiana and Arkansas, is offering contactlessmobile payments and rewards to its customers.

What do all these rewards programs have in common? Mobile +retail = success! Consider the impact that Groupon, Living Social,Foursquare, and Facebook are having on consumer buyingbehavior.

The question that issuers should be asking themselves is which ofthese strategies drive more transaction traffic? And if they dodrive more traffic, how can debit issuers capitalize on such thingsas registered card usage, a relatively easy way for merchants tocapture payments. Getting in on the ground floor of being theregistered payment card of choice could be a near term opportunityfor some issuers (and perhaps for some networks) as they try tofigure out the new balance of power between merchants and issuers.They still need one another to survive and it could be that thisevolution round ends up bringing them closer together afterall.

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