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How effective are rewards programs in promoting payment card usage? Empirical evidence

Listed author(s):
  • Carbó-Valverde, Santiago
  • Liñares-Zegarra, José M.

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.

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File URL: http://www.sciencedirect.com/science/article/pii/S0378426611001695
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Article provided by Elsevier in its journal Journal of Banking & Finance.

Volume (Year): 35 (2011)
Issue (Month): 12 ()
Pages: 3275-3291

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Handle: RePEc:eee:jbfina:v:35:y:2011:i:12:p:3275-3291
DOI: 10.1016/j.jbankfin.2011.05.008
Contact details of provider: Web page: http://www.elsevier.com/locate/jbf

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