Vendors: Debit Card Rewards Programs Will Change, Not Disappear
Debit card rewards programs at credit unions will survive the coming downturn in debit card interchange, but they will have to change and broaden their foundations in order to remain a part of credit union programs and services, card executives and consultants say.
"I think debit rewards will remain because Americans simply love rewards programs of all sorts," said Bill Lehman, a card consultant for Card Services for Credit Unions, the association of credit unions which process their card transactions with FIS. "Rewards programs have moved out of the credit card space and debit space and are now in retailers and online spaces because American consumers love them and have come to expect them," he said. "Their economics are what are likely to change a bit."
But Lehman and other analysts and executives said that debit card rewards programs are too well established and have too much support to disappear, although they might ask their debit cardholders to accrue rewards points more slowly.
"Maybe their base might move from one point for every two dollars spent to one point for every three, four or even five dollars spent," Lehman said. "But the program's goals of increasing and building on member loyalty and affinity will remain."
Tom Gandre, group executive with PSCU Financial Services, also expects debit rewards programs will remain strong and said that relationship rewards that could help build member loyalty to the credit union overall would also likely continue to grow.
PSCU is a payments CUSO that works with credit unions that process their card transactions on the First Data Corp card platform and also provides other card support and bill-pay products.