No matter how rewarding a credit card is, redeeming points is typically a clunky process that requires the user to do complex math and mail in vouchers. To date, the lone island of simplicity in this sea of confusion has been with JPMorgan Chase & Co. and American Express Co., which allow cardholders to use points as easily as dollars when shopping on Amazon.com Inc.
Now, Discover Financial Services is joining the movement by integrating its card with Amazon.com's checkout process.
Card issuers do not typically advertise their product's based on their ease of use — with good reason. JPMorgan Chase's cobranded Amazon.com card, for example, allows people to redeem points for a digital code worth $25, which is sent by mail. For those seeking immediate gratification there's also now the instant option, thanks to integration into Amazon's checkout process.
"Our goal is that they [cardholders] continue to use our card as a primary card," says Dana Traci, Discover's vice president of rewards and product management.
It's a solid strategy, says Adil Moussa, a senior analyst at Aite Group. Amazon integration "will actually push you to use that card more than any other," he says.
Discover believes its system will be more appealing than its rivals' because it makes the points-to-cash translation straightforward: "A dollar in Cashback Bonus is a dollar" on Amazon.com, Traci says.
JPMorgan Chase translates each point into one penny and Amex uses an even more complex process that equates each point to seven-tenths of a penny.
Once a card is linked to a shopper's account, Amazon.com displays a points balance at checkout. Users are allowed to spend any number of those points on an order. They do not need to wait for a minimum number of points to accrue.
Discover linked this system to its Cashback Bonus card. It is urging customers to try out the new process by offering them double points on up to $250 of purchases each month at Amazon.com through the end of the year. It is also offering double miles to users of airline mileage rewards cards. (One airline mile does not equal one dollar, but Discover does the conversion for its customers behind-the-scenes so the proper balance is displayed on Amazon.com's checkout page.)
Customers who want cash can still request a direct deposit or statement credit, Traci says.
Since customers can choose to spend only part of their point balance on an Amazon.com purchase, they can split their redemption among all of these options.
As early adopters of the easy redemption process, Discover, JPMorgan Chase and Amex "might actually be able to get a lot of momentum," Moussa says. "This is probably going to be the way of the future," he says.
Although the goal of this integration is a simpler transaction, it is far from a simple process to get the necessary technology in place. Traci says it took no more than a year to put the technology in place.
When JPMorgan Chase linked its card to Amazon.com's checkout process in July, it required custom-built connections to its core processing system. New protocols were created to allow JPMorgan Chase's systems to add point spending as a transaction type similar to credit and debit transactions.
Amazon.com did not respond to a call requesting comment.