This summer, First Data conducted a consumer loyalty study focused on rewards programs for the financial institution market sector. More than 1,000 U.S. consumers participated in the study. Key findings include:
• Credit card rewards programs are the most popular, versus debit card or “other banking” rewards programs such as those tied to savings accounts
• Consumers are frustrated – especially when they cannot use the rewards being offered or have no choice when selecting rewards
• Consumers have strong opinions about what constitutes a “unique rewards program”
• The most important program features are the ability to select rewards and ease of use
More detail is available on these findings. Credit card rewards program study goes into further detail on these findings and provides additional statistics that offer important perspectives for financial institutions to consider.
Essential questions to ask:
1. Do you have a cancellation fee? New businesses always pay more than established businesses because no one knows how much revenue you’ll really generate. Rule #1 – don’t sign a contract that has a cancellation fee,. You need flexibility to renegotiate or move on as your business grows.
2. What will my cost be for Rewards Cards? More than half of all cards presented by consumers are usually REWARDS cards. (Cards with points or miles that accumulate for the benefit of the card owner). The fee for processing these cards is higher than other cards. Since this is the most common card presented, in order to compare companies, you need to know what your cost will be for Rewards cards. In reality, there are many different rewards cards rates- your processor should at least be able to tell you what your l_owest cost possible is for these cards_. Don’t compare ‘qualified rate’ if that’s what’s offered, compare Rewards Cards rates because that’s what you’ll hit most often.
3. Will my statement show what levels of interchange I hit? If the statement doesn’t break out the cost of the types of cards listed, such as below, look elsewhere to avoid hidden charges.
Here’s something to help you calculate and compare costs: VERY ROUGH
65% rewards cards
20% debit cards
5% corporate cards
10% regular credit card (consumer retail)
Make a spreadsheet- put in columns for cost per transaction, sales per transaction, etc.
So if you projected $100,000/mth in sales, $65,000 would process at rewards rate, $20000 at the debit rate etc.
Now you have a much better comparison of numbers.
Choosing the right vendor. By asking the questions above, you can narrow your list. I realize the terminology is greek to anyone dealing with this for the first time. But that’s OK. You’ll sound super knowledgeable to anyone you talk to (translates into a better deal) and the point is to narrow your list. You may contact me for a quote 954-942-0483, 9-5 ET:)