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Friday, September 17, 2010

Rewards Cards in the U.S., 3rd Edition

2010 brings a perfect storm to the credit card industry, driven by recession-induced changes that are reshaping its core. At the same time, card rewards have become ubiquitous. In the face of some of the most significant changes the credit card industry has ever faced, some argue that rewards programs are simply no longer feasible in an era of constrained revenue and profits. However, as detailed in Packaged Facts’ Rewards Cards in the U.S., it is not a matter of eliminating reward programs, but rather about adapting them to some of the most significant changes the credit card industry has ever faced.
In its most consultative report in the series, this 3rd edition of Rewards Cards in the U.S. helps position industry participants to navigate this reengineering in card rewards by assessing the following industry trends and challenges:
  • How does continued migration to electronic payments shape the future of rewards?
  • Which regulatory changes are most relevant to rewards?
  • Understanding the macroeconomic and credit factors that shape the pool of current and future credit card customers.
  • How large is this pool of customers? 
  • Does the current credit environment effect migration from credit to debit? Why? How?
  • Which fee structures are being implemented—or could be implemented—to counteract regulatory change?
  • How are card issuers’ credit card portfolios adapting to change? How can they share in tapping a smaller pool of cardholders while growing profits?
  • What will happen to affluent, credit worthy cardholders? Less credit worthy cardholders? How do rewards play a role?
  • Can rewards help grow transactions and help extend card reach beyond a shrinking consumer base?
  • How does closed-loop versus open-loop competition and significant industry consolidation affect competition?
  • What is the fate of co-brand rewards?
  • Which reward types best fit the needs of specific consumers?
  • Over the course of the recession, which consumers are active card users? Multiple card users? Transactors? Revolvers? How has this changed over time?
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