What Is The Future Of Bankcard Reward Programs?

Do you carry a Visa or MasterCard credit or debit card that has some type of a reward program attached? Maybe you earn miles toward travel related rewards or points that can be redeemed for gift cards or merchandise. It seems these days that every issuer has added a rewards program or is in the process of adding a rewards program. So if you look into the not too distant future and every card you carry has some type of a rewards program...which card will you prefer?

This is the question that bankcard issuers should be asking and they should be putting a strategy into place to address this question. But the question is bigger than just making their program different in terms of richer rewards, or unique redemption items, it goes to a bigger question - "Can they afford the program?". Or maybe the better question would be, "Can they afford NOT to offer a compelling rewards program?".

With interchange funding these type of reward programs, what will occur if interchange is lowered? Will the banks reduce the benefits associated with their reward programs? Will they start to charge the cardholders a fee?

I believe that merchant-centric reward programs will start to replace the interchange funded reward programs now in place. Merchants via technology solutions will be able to fund cardholder specific rewards for specific shopping behavior. Will they partner with bankcard issuers? Or will they launch their own rewards programs?

These are just some of the questions I hope to address in the coming weeks.