The Future of Payment Card Loyalty - Market Research Report On Aarkstore Enterprise

Introduction

Introduction

The Future of Payment Card Loyalty analyses the history, current situation and future of the global payment card loyalty market. Utilising a mixture of propietary quanititative data and qualitative research, this report looks at how payment card loyalty programs work, their impact on card issuance, usage and revenue, and how key players are adapting to a dynamic and competitive environment.

Scope

*Analyses the current structure of payment card loyalty programs, their objectives, key players, historic development, and current threats.

*Includes detailed analyses of the material impact of loyalty programs on card issuance, transaction volumes and values, revolve rates and revenue.

*This report analyses four key strategies for issuers to effectively deal with the long term threats facing the sector, with international case studies.

*Primary interviews with key players provide perspective from issuer, payment scheme, retailer, and third party provider points of view.

Highlights

Payment card loyalty programs are an established feature of all markets globally. In each of these regions they continue to exist as either cash back, points based, or club model. They are an established and expected feature of the market and will not disappear anytime soon.

Payment card loyalty programs on average have a positive effect on card usage and revenues. This includes an average share of 55% of cards in issue, 60% of transaction volumes, 71% of transaction values, and 61% of balances outstanding.

Issuers and schemes have little choice but to adapt and evolve payment card loyalty programs due to economic and other pressures. These changes include a focus on specific consumer segments, greater focus on personalization, leveraging retail brands, and leveraging new technology.

Reasons to Purchase

*Understand what card loyalty programmes can do for your business by understanding what they are, and how they have developed.

*Plan effectively with concrete data providing solid understanding of what loyalty programs are capable of achieving.

*Find out how payment card loyalty programs can benefit your company with real world examples of key player strategies

Table of Contents :

"OvervieW 1

Catalyst 1

Summary 1

Methodology 1

Executive Summary 2

Card loyalty programs have four distinct forms 2

Card loyalty programs increase acquisition, retention and usage, and collect consumer data 2

Card loyalty schemes exist in only a select number of forms 2

Issuers, merchants and third party providers are the key stakeholders in loyalty programs 3

Card loyalty programs are constantly evolving and adapting to their environment 4

The traditional loyalty model is broken 5

Pressures on revenues put the economics of loyalty programs under threat 5

Well implemented card loyalty programs produce results 5

Rewards and benefits are found in every country 6

Consumers with rewards and benefits account for 60% of all transactions by volume 7

Cards with rewards also have higher transaction values 8

Cards with rewards tend to hold lower revolve rate 9

Cards with loyalty rewards typically hold higher balances 10

The breakdown of potential revenue by type of reward is inconsistent across regions 11

Payment card loyalty programs have no choice but to adapt to survive 13

Targeting a specific market is a long proven way to extend cardholder engagement 13

Personalization provides a mechanism to offer greater engagement with improved efficiency 13

Leveraging retail brands can allow issuers to tap into existing loyalty 14

Leveraging new technology allows issuers to provide new means of loyalty 14

Table of Contents 16

Table of figures 17

Table of tables 18

Card Loyalty Programs Have Four Distinct Forms 19

Card loyalty programs increase acquisition, retention and usage, and collect consumer data 19

Loyalty schemes act as catalysts to increase card acquisition 19

Loyalty schemes give consumers a reason to retain their cards 19

Loyalty schemes are frequently aimed at primarily at incentivizing card usage 20

Loyalty schemes provide a mechanism to collect complex data on each cardholder 21

Card loyalty schemes exist in only a select number of forms 22

Loyalty programs are based around cashback, points or club models 22

Cashback 23

Points based loyalty schemes 23

Club models 24

Issuers, merchants and third party providers are the key stakeholders in loyalty programs 24

Retail banks and mono-line card issuers form the basis of all payment card loyalty schemes 25

Retailers and merchants benefit from increased sales and consumer data 26

Third Party loyalty program providers manage schemes on behalf of others 26

Card loyalty programs are constantly evolving and adapting to their environment 26

Stage one: non-credit card loyalty schemes 27

Non-credit card loyalty schemes are common in many sectors at an early stage 28

Stage two: loyalty as a means of customer acquisition 28

Stage three: loyalty penetration declines as some issuers begin to withdraw their schemes 28

Stage four: move the program on or focus on price 29

Stage five: personalization and market stability 30

Personalization and targeting becomes critical in reaching skeptical consumers 31

The traditional loyalty model is broken 31

Pressures on revenues put the economics of loyalty programs under threat 31

Credit card issuers are facing a growing threat from the emergence of loyalty programs for debit cards 32

Market dynamics can cause loyalty programs to recede in certain markets 33

Well implemented card loyalty programs produce results 36

Rewards and benefits are found in every country 36

Consumers with rewards and benefits account for 60% of all transactions by volume 38

Cards with rewards also have higher transaction values 41

Cards with rewards tend to hold lower revolve rate 44

Cards with loyalty rewards typically hold higher balances 46

The breakdown of revenue by benefit type is unique to each region 49

Payment card loyalty programs have no choice but to adapt to survive 54

Issuers must re-assess their goals and objectives to determine the best way to achieve them 54

Targeting a specific market is a proven way to extend cardholder engagement 55

American Express Zync is targeting a 20 something audience 55

Personalization offers greater engagement with greater efficiency 57

Carrefour has a launched a discount program that allows consumers to make decisions 57

Leveraging retail brands can allow issuers to tap into existing loyalty 58

Tesco's success in the credit card sphere is due to its wider brand loyalty 59

Leveraging new technology allows issuers to provide new means of loyalty 60

Barclaycard's freedom program offers PoS redemption through EMV technology 61

APPENDIX 63

Supplementary data 63

Any benefit compared to no benefit summary 63

UK Cards with Loyalty features, 2005-2009 65

Number of cards in issue 66

Transaction Volumes 69

Value of transactions 72

Balances Outstanding 76

Revolve Rates 80

Transactions per card 82

Revenues 86

Definitions 88

Affinity card 88

Average transaction value 88

Balances outstanding 88

Co-branded card 88

Credit card 88

Charge card 88

Debit card 88

Deferred debit card (pay later) 88

EMV 89

Frequency of use 89

Interchange 89

PoS terminal 89

Methodology 89

Primary research 89

Secondary research 89

Further reading 89

Ask the analyst 90

consulting 90

Disclaimer 90

For more information please visit :

http://www.aarkstore.com/reports/The-Future-of-Payment-Card-Loyalty-45095.html

The Future of Payment Card Loyalty - Market Research Report On Aarkstore Enterprise

By: Aarkstore Enterprise

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