Merchant-Funded Rewards – Challenges and Opportunities for Retail Banks

With the emergence of payment cards and their increasing adoption by consumers and acceptance by merchants, banks and other cards issuers have been making significant efforts to make consumers use their cards over those of their competitors. In line with this, banks have been at the forefront in issuing cards with benefits and features offered through loyalty programs. These programs allow banks to distinguish their products from the basic services offered by competitors by offering attractive deals in a variety of product categories.