Incentive - August 2009 - (Page 36)

AWARDS Debit & Stored-Value Cards: Universal Workhorse Open-loop prepaid cards gain traction as companies streamline incentive programs By William Ng F iscal conditions continue to yield opportunities in the open-loop prepaid sector of the corporate gift card market. As these incentive cards offer program participants nearly unlimited redemption options, companies benefit from their cost-effectiveness and flexibility. Still, suppliers like Jonathan Price, vice president of business-to-business solutions for InComm, a stored-value rewards provider based in Atlanta, stress that the use of such cards—also known as universal prepaid cards—have been growing even before the economic downturn. Their ability to be redeemed almost anywhere takes the guesswork out of picking a reward that can motivate everyone, thereby not wasting precious program dollars. “These cards can be generic, branded, used one time, or reloaded, and as little as $10 can be loaded,” says Michael Chittaro, Visa U.S.A.’s senior business leader in charge of incentive and rebate programs, in Foster City, CA. “We continue to see consistent growth [in Visa prepaid cards], as companies have had to reduce their administrative costs and streamline programs.” The growth of open-loop prepaid cards also owes a debt to the popularity of conventional debit cards, say Chittaro and Price, as they can be used wherever debit cards are accepted. That universality, explains Matt Harris, vice president of marketing at American Express Incentive Services (AEIS), in Fenton, MO, also lets cardholders acquire whatever is personally meaningful. Top to Bottom: Omni Prepaid’s Visa card features the cardholder’s personal photo; InComm’s Vanilla Visa card can be loaded with up to $750; AEIS’ Persona Platinum is a popular themed shopping card Not surprising perhaps, users have been redeeming their open-loop cards for essential goods rather than luxury items. One study, released in June by New York- and Toronto-based Berkeley Payment Solutions, a North American provider of Visa prepaid card programs, showed that incentive spending has followed recessionary trends. In an analysis of $6 million in spending from 5,000 of its Visa cards from January 2008 to April 2009, redemptions at fast food restaurants, discount merchants, grocers, and drug stores/pharmacies all spiked while purchases of home furnishings and durable goods plummeted. In difficult times, “spending migrates toward day-to-day necessities,” says David Eason, president of Berkeley Payment Solutions, adding, “companies need to be sensitive to how they reward employees.” In a sign of the times, “many companies are moving away from highly visible luxury items, typically part of travel and merchandise programs, to avoid perception and allow individuals to choose rewards most appropriate to their needs,” he notes. Chittaro says that in Visa U.S.A.’s own data tracking, there have, indeed, been “big jumps” in supermarket, department store, gas station, and quick-service restaurant usage. That trend, he says, is also a result of the now-widespread practice of using debit cards to make daily purchases. Pundits acknowledge that this can actually devalue the apparent worth of the incentive, and they note that they work with 36 | Incentive | August 2009 | incentivemag.com http://www.incentivemag.com

Table of Contents for the Digital Edition of Incentive - August 2009

Incentive - August 2009
Contents
Editor’s Note: Confession of a Cash Clod
Headlines
Cover Story: Ameriplan, a Multilevel Marketing Firm, Stands By Incentive Travel
Gifting for Good
Research: Gift Card IQ
Strategies: Proving Ourselves
Primer: Diversity Best Practices
Travel News: Where to Go and How to Get There
Potentials: Here and Now
Electronics: Recharging the Market with What Excites
Debit & Stored-Value Cards: The Universal Workhorse

Incentive - August 2009