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Payment Card Business Still Offers Variety of Opportunities for Growth

The future of cards is still bright, but the sky's the limit on just what form card payments will take.

In fact, Accenture's Winston worries that the number of loyalty programs available today is becoming overwhelming. "How many more points does a person want, and how many cards do they want their points spread across?" he asks. "You can't even consolidate points much of the time."

MasterCard's Shipley, however, asserts that there are opportunities around loyalty programs beyond their standard value proposition. "Not only can people earn rewards by using their cards, but they can earn them by maintaining a savings account with their bank or having a mortgage with their bank," he explains. "Issuers can also perform householding now, where a husband and wife can pool their rewards points." This greater level of personalization will improve retention rates, according to Shipley.

Another strategy in which issuers are starting to engage is linking rewards from credit cards to rewards from debit cards. An element of the MasterCard Relationship Rewards program is combining rewards from these two areas after the bank identifies which products should be connected.

Zeroing in on the right accounts, however, is no easy task, says Fifth Third's Groch. The bank has offered a linked credit/debit reward program since the end of last year. "We worked with MasterCard's rewards system to provide us with the infrastructure. But it takes a lot of work on our part to tell MasterCard what cards to join together," he says. "It's not as easy as you would think. You have to use business rules to look at how you can verify if an account represents the same customer."

Even Accenture's Winston concedes that there are ways to build up loyalty programs. "Points programs are going to move to more unique offers to single customers or groups of customers based on analysis of payments trends and customer behavior." He cites the events-related rewards program offered by American Express for theater or concert tickets as an example of this.

The most recent instance of revamping the rewards program concept came in May with the announcement by CapitalOne (McLean, Va.) that it will offer a single card to process both debit and credit transactions, a concept called "decoupled debit." It will aggregate points from either type of transaction. This is unusual, says Winston, since debit is usually tied to a bank account. Instead, CapitalOne is using its ACH network access to process debit transactions and the MasterCard network for credit payments.

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