The Future of Consumer Rebates

Over the last 5 years consumer focused companies have moved their rebate programs from paper checks to plastic prepaid cards.  This demonstrates an ongoing trend to reduce paper in the payments system, while providing consumers with the added convenience of a MasterCard® or Visa® card.  The Mercator Advisory Group, a leading industry consulting group, predicts the growth of prepaid cards in the consumer incentive market to grow at a  200%+ clip by the end of 2010. 

Consumer rebates create an opportunity for a organization to drive brand loyalty by ingratiating themselves with their end user.  A prepaid MasterCard® or Visa® loyalty card offers an Original Equipment Manufacturer (OEM), a unique financial vehicle for promoting their product or service. 

  • Consumers:
    • Get the item they want at a lower price
    • Have immediate access to their funds and universal acceptance –– with no trip to a bank necessary


  • Original Equipment Manufacturers:
    • Receive a substantive revenue lift in the product/service being promoted
    • Establish an active, personal connection with the consumer through a customized card activation/registration process
    • Capture end user spending behavior by effectively levering a processor analytics engine
    • Enjoy brand enhancement as the custom designed card is used by the consumer to make subsequent purchases
    • Utilize custom card carriers/greeting cards to construct detailed messaging to be directed at their customer
    • Improve the economics of their rebate program

Some consumer groups claim that the reason for the shift from check to card is the hope (by the OEM) that the end user will forget about using their reward.  The reality is that the “breakage” income is only a small component in the overall revenue derived from the card.  Most OEM’s want their customer to spend the awarded monies on other goods/services they offer. 

My advice to cardholders:

  • Use the card immediately
  • Identify fees and the timing of those fees
  • Monitor your card balance (via the web or IVR) so you can easily navigate a split tender transaction (divide the bill)
  • If your card is lost/stolen, immediately report it so you can receive another card

My advice to OEMs:

  • Prior to making a decision, review the capabilities of both rebate fulfillment companies as well as prepaid card companies (many times money can be conserved by negotiating separate contracts)
  • Look for economic flexibility with your potential partner (what revenue streams can be shared)
  • Understand the personalization capabilities of your potential partner –  can they help establish a one to one relationship with the end user
  • Understand how program change requests will impact the delivery timeframe
  • Ensure that complex reports (spend data) can be accessed in a timely fashion

Prepaid cards are a flexible, cost-effective way to distribute cash rewards to participants.  If utilized correctly, both the OEM and consumer will enjoy the many benefits associated with the card.   

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