San Francisco, CA, USA
December 7, 2006Making
Loyalty Pay:
The Relationship Between Rewards and Payments
Report Published by Celent
Alternatives to credit card reward programs
are increasing as a result of new payment technologies and business
models.
Credit card issuers have been the main
beneficiaries of reward programs, while merchant loyalty programs have
failed abysmally. However, new technology and business models will allow
merchants and payment providers to benefit from rewards programs,
according to the new Celent report, Making Loyalty Pay: Examining the
Relationship Between Rewards and Payments.
New technology and business models are
shifting the reward and payments landscape and will alter the traditional
relationship among payment providers, merchants, and technology providers.
Online, mobile, and biometric payments will compete with credit cards and
use rewards programs to build loyalty. Coalition-oriented and
merchant-sponsored payment networks are models that will help merchants
benefit from rewards programs. These new technologies and business models
may benefit merchants, technology providers, and payment providers while
minimizing issuer payment revenue cannibalization that comes about as
consumers shift their payment and reward preferences.
“While issuer rewards programs have been
quite successful in achieving their objectives, most merchant loyalty
programs, particularly grocers, convenience stores, and gas stations, have
failed miserably in their loyalty objectives,” says Dan
Schatt, author of the report and senior analyst. “Increasingly, new
business models and technology are being introduced that will expand the
loyalty pie and fuse issuer and merchant interests and expand the pie for
all parties.”
In this report, Celent profiles companies
and technology initiatives best positioned to deliver rewards programs to
further the loyalty objectives of merchants and payment providers. Celent
details credit and debit card rewards programs that are most prevalent in
today’s market and provides a glimpse as to how merchants and payments
providers will position rewards programs in the next few years.
The 59-page report contains 33 figures and
eight tables. A table of contents is
available online.
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About Celent
Celent, LLC is a research and advisory firm
dedicated to helping financial institutions formulate comprehensive
business and technology strategies. Celent publishes reports identifying
trends and best practices in financial services technology and conducts
consulting engagements for financial institutions looking to use
technology to enhance existing business processes or launch new business
strategies. With a team of internationally experienced analysts, Celent is
uniquely positioned to offer strategic advice and market insights on a
global basis.
Media Contacts
New York - Arielle Weliky
aweliky@celent.com
Tel.: +1 212 269 7547
Paris - Alexandra Vouge
avouge@celent.com
Tel.: +33 1 42 61 06 88
Tokyo - Keiko Yaguchi
kyaguchi@celent.com
Tel.: +81 3 3571 7104
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