This IDC Financial Insights report looks at the channel model in depth through profiles of Affinity Solutions, Cartera Commerce, and Cardlytics, three firms that are directly aiding financial institutions in establishing themselves in this new opportunity. Payment card reward programs have begun to evolve from an "earn and burn" model based on total spending activity to a "channel" model that creates a method by which merchants can provide incentives and rewards directly to consumers based on card transaction history. This model simultaneously creates a new revenue stream for financial institutions to replace revenue lost to regulations and increases their relevance to their consumers and business customers.
According to Aaron McPherson, practice director for Worldwide Payment Strategies and the author of the report, "Banks have an opportunity here to reverse the adversarial relationship that has developed between themselves and the merchant community with a 'win-win-win' concept that gives them and their customers more value than traditional rewards programs while also helping merchants in a much more effective way."
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