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 news 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.