TY - JOUR
T1 - How effective are rewards programs in promoting payment card usage?
T2 - Empirical evidence
AU - Carbó-Valverde, Santiago
AU - Linares Zegarra, Jose Manuel
PY - 2011/12
Y1 - 2011/12
N2 - Card issuers have mainly relied on rewards programs as their main strategy to increase usage. However, there is scarce evidence on the effectiveness of these programs. This paper is addressing two topics which could have important managerial and public policy implications: (i) it estimates the impact of rewards on the use of cards and (ii) it quantifies their economic effects in terms of the cash substitution. We find that rewards may significantly modify choice for card payments. Their economic impact also varies significantly across types of rewards and merchant activities. Additionally, rewards seem to be more effective for debit cards.
AB - Card issuers have mainly relied on rewards programs as their main strategy to increase usage. However, there is scarce evidence on the effectiveness of these programs. This paper is addressing two topics which could have important managerial and public policy implications: (i) it estimates the impact of rewards on the use of cards and (ii) it quantifies their economic effects in terms of the cash substitution. We find that rewards may significantly modify choice for card payments. Their economic impact also varies significantly across types of rewards and merchant activities. Additionally, rewards seem to be more effective for debit cards.
UR - http://www.sciencedirect.com/science/article/pii/S0378426611001695
U2 - 10.1016/j.jbankfin.2011.05.008
DO - 10.1016/j.jbankfin.2011.05.008
M3 - Article
SN - 0378-4266
VL - 35
SP - 3275
EP - 3291
JO - Journal of Banking & Finance
JF - Journal of Banking & Finance
IS - 12
ER -