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

Santiago Carbó-Valverde and José Liñares-Zegarra
Authors registered in the RePEc Author Service: Santiago Carbo Valverde

Journal of Banking & Finance, 2011, vol. 35, issue 12, 3275-3291

Abstract: 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.

Keywords: Payment cards; Rewards; Choice; Merchants; Cardholders (search for similar items in EconPapers)
JEL-codes: D12 E41 G20 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Working Paper: How effective are rewards programs in promoting payment card usage? empirical evidence (2009)
Working Paper: How Effective Are Rewards Programs in Promoting Payment Card Usage? Empirical Evidence (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:35:y:2011:i:12:p:3275-3291

DOI: 10.1016/j.jbankfin.2011.05.008

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