ST. PETERSBURG, Fla.-Merchant-funded rewards programs are on the rise, thanks to the need for issuers to keep rewards programs in place on debit cards to stay competitive.
Two card processors shared those sentiments as they move to introduce their own merchant-funded programs. Both indicated member CUs are expressing significant interest in the programs, in part because merchants pick up a portion of the cost.
PSCU has introduced a new merchant-funded rewards program members access through its CURewards Mall. Annie Cox, director of loyalty solutions, said PSCU timed the release for the holidays and to help credit unions maintain rewards or add them as they move to take banks' business. "We are enhancing credit union reward programs on both credit and debit to keep CUs competitive."
With the new program, PSCU has agreements with a large number of local, regional, and national merchants, both online and in-store, and allows CUs to add in their own local partners. PSCU is providing marketing support and low-cost marketing materials.
In Rancho Cucamonga, Calif., Co-Op Financial Services has introduced ShoppingFLING. Offered in partnership with the Dover, N.H.-based RewardsNOW, the merchant-funded rewards program helps CUs offer debit rewards that save the CU over a standard giveback program, said Caroline Lane, SVP, business development and marketing.
Lane acknowledged the move is a way for CUs to affordably offer rewards at a time when they can take banks' business. "No question it's expensive to offer a debit rewards program in an environment in which interchange is eroding, even if the loss of interchange is longer-term for small financial institutions," Lane said. "We have to find ways for credit unions to make their debit card more attractive but at a sustainable cost. Merchant-funded programs can help credit unions save more than one-third of their costs over a standard rewards program, and that estimate is conservative."
Members access ShoppingFLING directly from a credit union's website. Members earn cash back for shopping online or in store and can take advantage of special deals.
Lane noted that consumers are much savvier today about what their debit card costs and gives back. "So credit unions need to have good story to tell and rewards is part of that story."
