How effective are rewards programs in promoting payment card usage? : empirical evidence

by Santiago Carbó-Valverde and José M. Liñares-Zegarra

Card issuers have mainly relied on rewards programs as their main strategic driver to increase electronic payments. However, there is scarce evidence on the effectiveness of rewards programs. This paper offers novel evidence on two key issues: i) it measures the impact of rewards programs on the use of payment cards; and ii) it quantifies their economic impact in terms of the cash substitution. The results show that rewards may significantly modify preferences for card payments, their economic impact vary significantly across types of rewards and merchant activities and rewards seem to be more effective on average for debit cardholders..- Payment cards ; rewards ; preferences ; merchants ; cardholders

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Year of publication:	2009
Authors:	Carbó Valverde, Santiago ; Liñares-Zegarra, José M.
Publisher:	Frankfurt am Main : European Central Bank
Subject:	Kreditkarte \| Credit card \| Elektronisches Zahlungsmittel \| Electronic payment \| Beziehungsmarketing \| Relationship marketing \| Konsumentenverhalten \| Consumer behaviour \| Rationalität \| Rationality