Fast Enough Rewards?
MasterCard is betting that consumers are willing to put up with the hassle of carrying an extra card in their wallets if it means they can instantly redeem reward points. According to our readers, that's no sure thing.
The Pay With Rewards program announced last week allows cardholders to convert points they earn on their purchases into cash credit. This credit can be applied when they make a purchase at any merchant that accepts MasterCard. But this credit will reside on a separate card — think of it as a prepaid debit.
While that's a lot quicker than waiting for a credit to appear on a monthly statement, it's not quite the Holy Grail of real-time rewards. To apply the credit, consumers have to remember to pull out that second card and swipe it to convert accumulated points to a discount on their purchase.
In an online poll last week, just over a third, or 35%, of respondents said this would provide the desired reinforcement for the consumer to use the card more, saying consumers are willing to carry an extra card in their wallet if it meant redeeming rewards points faster. Another 27% said carrying an extra card around is too much of a hassle, while 38% said it's a moot point, since many people have no idea how many points they've earned, let alone how to redeem them.
One reader commented, "Consumers are trying to reduce the number of cards in their wallet," so requiring them to carry a separate card is moving in the wrong direction. She added, "most people have no idea how many points they have because it doesn't show on monthly statements; perhaps if it did, similar to the cell phone company's statement, it might help."
A story about banks that use PFM software to cross-sell products started a conversation that was picked up by Aite Group senior analyst Ron Shevlin on his Marketing Tea Party blog.
The American Banker article quoted marketing executives at First Mariner Bank in Baltimore as saying the bank is planning to offer customers a PFM application from Geezeo that uses specific transaction details, like merchants' names, to present ads for specific banking products. For example, the bank might use Geezeo's software to note customers' auto insurance payments, even those made to a rival insurance provider charged to another bank's credit card. The software could then present on the customer's online banking page an ad for First Mariner's own insurance.
"That certainly is the promise of PFM," Shevlin said. But he said it's not enough to know whether a customer uses a particular product; banks also need to know if the customer is a good prospect. For an insurance product, for example, that means knowing whether the customer meets the bank's own underwriting criteria.
Regional Bank Unrest
Another regional banker is unhappy about losing the input they have on monetary policy by way of oversight by the Federal Reserve. A reader, identified only as a "Kansas Banker," said a proposal in the regulatory reform bill to strip the Fed of its oversight of all but the largest banks would also strip the central bank of the "independent voices" of regional banks. "This is being completely overlooked during the politically charged debate" over the proposal.
"Secondarily, along with the reduction in the number of banks the Federal Reserve will provide oversight for, there will be a corresponding reduction in Federal Reserve employees, the same employees that provide services as lender of last resort through the discount window in the event of a liquidity crisis. This is a BIG mistake … the Federal Reserve was established in 1913 because nobody trusted New York and Washington — the two most responsible for the current events. This portion of the bill will provide power to the very people who created the problem."