Wednesday, January 31, 2024
Additional studies by Runa and i2C Inc. show consumers favor flexible spending options and personalized programs.
The 2024 State of Merchant Branded Payments, published by Runa on Jan. 25, 2024, found that gift cards such as Walmart Pay, Uber Cash and Starbucks Rewards are bolstering customer engagement, especially when consumers can use points balances as currency at other retailers.
"A growing proportion of consumers say they value receiving a digital balance usable at multiple merchants, and this preference is driven by immediate access to funds (60%), the convenience of bypassing traditional banking processes (56%), and the flexibility to choose from different merchants (52%)," Runa researchers wrote. "Notably, convenience (57%) and speed (51%) emerge as the top priorities for consumers when selecting their preferred method to receive funds."
The survey of 1,000 U.S. consumers also found that gift cards are the most popular type of corporate reward, used by 49 percent of respondents for indulgences and 45 percent for essential purchases. Preferred payout options ranged from bank transfers (49 percent) to digital wallets (48 percent).
A copy of the report is available at 20335080.fs1.hubspotusercontent-na1.net/hubfs/20335080/Runa-Theme/Runa%20Imagery%20Feb%202023/Resource%20Center/2024-State-of-Prepaid-%26-Stored-Value.pdf
The Credit Economy: The Role of Reward Programs in Consumer Credit Usage, released Jan. 30, 2024, by PYMTS Intelligence and i2C, revealed that GenZ consumers favor nontraditional rewards more than the cashback programs that remain popular with older adults. Based on a November 2023 survey of 3,233 U.S. consumers, the report framed GenZ as a pivotal demographic for financial institutions; researchers further warned that one-size-fits-all rewards programs may soon become obsolete.
"Three in five members of Gen Z prefer nontraditional rewards such as flash sales or event access, contrasting with older generations' long-held affinity for cashback rewards," researchers wrote. "Legacy formats such as mail or in-store offers are not well suited to Gen Z, which markedly prefers mobile app delivery of rewards, with nearly half favoring app-based offers. These youngest adult consumers have distinct spending patterns that support self-expression and favor categories such as clothing and accessories."
Researchers additionally noted that rewards program popularity cuts across all demographic segments. "More than 80% of consumers receive rewards offers from their credit cards, and 72% have utilized these rewards in the last 90 days," they wrote. "The data also shows high interest in these programs, with 90% of consumers exhibiting enthusiasm, particularly among younger generations. Millennials and Gen Z consumers are the most likely to show interest, both at 94%, but Gen X and even baby boomers and seniors are not far behind, at 90% and 88%, respectively."
A copy of the report is available at: www.pymnts.com/study/credit-economy-gen-z-personalized-credit-cards-rewards-program/
As Runa researchers noted, consumers expect to pay with points at all points of interaction. This, they found, furthers the need for merchants to invest in branded payment programs to drive engagement and POS access, presumably paving the way for more gift and loyalty integrations with POS providers such as the recent integration of Factor4 gift cards and LMS-POS devices.
LMS-POS, a POS provider for liquor and retail stores that features a built-in lottery management system, will now enable merchants to process gift card transactions from LMS-POS systems, online and on mobile devices.
Dan Battista, Factor4 CEO, said the integration "enables us to expand our market share in the liquor and retail verticals and to build a partnership with a top POS system in these verticals." Ranjan Regmi, co-founder, LMS-POS, called the integration "another tool built into our platform that allows [participating merchants] to increase sales and revenue."
In the coming months, industry leaders expect to see more consolidation in the gift and loyalty sector, driven by escalating demand for these programs. Blackhawk Network CEO and President Talbott Roche remarked that the strategic acquisition of Tango Cards will improve both brands' customer experience.
"Tango pioneered the digital-first reward experience through its powerful API, coupled with world-class service and exceptional breadth of global content, making it the perfect complement to BHN's global product portfolio," she said in a statement. "We have been a longtime partner to Tango and were also an early investor."
David Leeds, founder and CEO of Tango Cards, agreed that today's customers need innovative technology. "I started Tango 15 years ago to fundamentally improve the incentives industry for customers and their recipients," he said, adding that joining BHN will further drive innovation, support and awesome customer experiences. 
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