Mobile wallets and digital payments apps are erasing the distinction between credit and debit, but many issuers still cling to old practices that treat those audiences differently. SunTrust is working to change that.

The Atlanta issuer's new "deals" feature, in which Cardlytics crawls through a user's purchase history to suggest cash-back offers from merchants they shop at frequently, does not discriminate between credit and debit card holders.

"We have a credit card suite that many clients take advantage of and many of them also have debit cards," said Carl Thibodeau, senior vice president of debit networks and emerging payments at SunTrust. "Our goal is to see more spending across all products."

Carl Thibodeau, senior vice president of debit networks and emerging payments at SunTrust.
Carl Thibodeau, senior vice president of debit networks and emerging payments at SunTrust.

Consumers access or redeem SunTrust Deals via SunTrust's mobile app. Once they complete a transaction using a credit or debit card, the offer is automatically credited to the client's account.

The mobile aspect of this rewards program is designed to help the bank in a couple of ways. Tying mobile offers to mobile banking opens up more data for analysis, making the offers more pinpointed. Also, SunTrust is trying to accommodate the growth of mobile commerce.

"This is where the clients are going, so that is where we're meeting them," Thibodeau said. "Without mobile you don't get as broad an audience."

Offering financial perks to consumers has become more expensive, and the traditional loyalty program models aren't retaining consumers as well as in the past, partly because digital shopping has made it easier for consumers to jump from one merchant, or payment card, to another.

Loyalty is getting to be a crowded field with separate merchant programs from quick-service restaurants, convenience stores, gas stations and mainstream brick-and-mortar retailers, plus aggregators like Groupon and LivingSocial, said Ray Pucci, associate director of research services at Mercator Advisory Group.

"If new loyalty programs are not differentiated enough from competition, feature rich or carry wide brand recognition, it becomes a tough sell to achieve respectable consumer adoption," Pucci said.

The pressure to right-size marketing expense is attracting technology vendors. First Insight is approaching the challenge from the merchant side, using analytics to determine how much a consumer is willing to pay for an item in an effort to reduce the amount of money "given back" through loyalty programs.

On the issuer side, U.S. Bank is using loyalty to sell higher-end purchases and travel paid for via mobile wallets, which it considers a more cost-effective way to capture higher-ticket payments.

The benefit of adding debit cards and more digital channels is that it makes the rewards program more dynamic and granular, which Thibodeau said can improve redemption. "Using digital channels allows us to refresh the content more regularly," Thibodeau said.

The Cardlytics partnership allows SunTrust to use the Atlanta-based technology company's broad data sourcing to improve market segmentation for offers.