No matter how rewarding a credit card is, redeeming points can often be a hassle involving complex math and mailed vouchers – except at Amazon.com, where a growing number of issuers let users spend rewards points as easily as cash.
Discover Financial Services is the latest card company to integrate its product with Amazon.com Inc.’s checkout process. It joins JPMorgan Chase & Co.’s cobranded Amazon.com card and American Express Co. in allowing users to redeem points during a purchase.
Rewards cards are not typically advertised on the ease of their redemption process, and with good reason. Chase’s Amazon.com card, for example, lets people redeem points for a digital code worth $25 at Amazon.com, but that code is sent by mail, adding days to a transaction that seems like it could be handled instantly online.
Integrating its rewards card with Amazon’s checkout process cut the pain from that process.
And for its part, Amazon.com prominently promotes each card whose rewards may be harnessed as currency during checkout. That makes them a potentially more attractive choice among other cards shoppers may have linked to their Amazon accounts.
"Our goal is that they 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 is joining this system after others have gotten a head start in using the same tactic to lock in their own customers. Discover expects that its system will be more appealing because it makes the points-to-cash translation straightforward: "A dollar in CashBack Bonus is a dollar" on Amazon.com, she says.
Chase translates each point to a penny and Amex’s system uses the more complicated math of equating each point with seven-tenths of a cent.
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, and is urging customers to try this new process by offering double points on purchases of up to $250 each month at Amazon.com through the end of the year. It is also offering double miles to users of miles rewards cards. (One mile does not equal one dollar, but Discover does the conversion behind the scenes so the proper balance is displayed at Amazon.com’s checkout.)
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 points balance on an Amazon.com purchase, they can split their redemption among all of these options.
As early entrants, these companies "might be actually able to get a lot of momentum," Moussa says, but many other issuers and retailers may follow their example. "This is probably going to be the way of the future," he says.
Though 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 necessary technology in place, but she does not know the exact length of time.
When 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 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.
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