Merchant-Funded Rewards Make Cards Cheaper for CUs
A majority of the credit unions around the country that issue cards will soon be able to offer merchant-funded rewards.
FIS, the credit and debit card processor for the majority of card-issuing credit unions, is adding some merchant-funded rewards to its existing ScoreCard rewards program.
Merchants help fund card reward programs because they serve as a way for them to both cut and target their marketing costs, Legters explained. Credit unions and card issuers like them because they help boost their cards’ popularity.
"Remember, a merchant funding rewards points only pays the points if a customer actually purchases a product subject to the reward," Legters said. In effect, this lets the retailer put marketing dollars in a program with proven results, he explained, adding that merchants saw this practice as more efficient than buying advertising and hoping to draw sales from people who saw the ads.