An executive with a leading card processor expects that credit card reward programs tied to and funded by merchants are only likely to grow over the near and medium term.

Robert Legters, vice president of loyalty services for card processor FIS, attributed the growing popularity of merchant-funded rewards programs to the economic dynamic that, he said, benefits both card issuers and retailers.

Merchants help fund card reward programs because they serve as a way for them to both cut and target their marketing costs, Letgers explained. Credit unions and card issuers like them because they help boost their cards' popularity, he said.

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