Nov 28, 2008

Report: Rewards programs are even more crucial for credit card issuers today

Research firm Aite Group has just produced a report on how the credit crisis will make credit card rewards programs even more crucial than they already are. Instead of simply saying that credit cards are the next bubble to burst and how customers are moving away from credit cards, this report attempts to go into more depth and starts to offer some visibility as to what the industry may look like once the dust settles.

"Credit card issuers are going through their most turbulent times since the introduction of credit cards. Potential new legislation and regulation threatens to reshape their business model, and issuers are facing rising charge-offs and a continued assault from merchants lobbying to cap or reduce interchange rates. Meanwhile, issuers must continue to deal with day-to-day challenges, such as new customer acquisition, card activation, and customer retention and card usage. In that context, issuers expect rewards to remain front-and-center to their strategy - notably merchant-funded rewards that alleviate issuers' reliance on interchange funding."

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