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The Green Sheet Online Edition

November 23, 2009 • Issue 09:11:02

Research Rundown

Rewards programs and untapped markets

The ongoing recession is causing speculation among financial service organizations regarding the future of consumer rewards programs. A Mercator Advisory Group study, Rewards in a Changing Environment Still Important (Within Reason), outlines perceived program value, participation and perceptions of changes that have occurred over the past year - with special attention given to credit card and banking rewards programs.

A survey of 1,012 online consumers in the summer of 2009 found that: credit card, supermarket and airline/hotel/travel programs are the most popular rewards programs and are most likely to be designated the most financially valuable by participants; cash back rewards are the highest ranked reward offering in terms of value; only 43 percent of credit cardholders surveyed actively use reward and loyalty programs; only 26 percent of res-pondents who traveled used these programs.

In a second study published in November, A Different Way of Offering Credit: Islamic Payment Cards' Potential in the Global Economy 2009, Mercator reports that the emerging demand for Islamic products and services is creating historic opportunities in the payments industry for the 1.6 billion Muslims worldwide who spend more than $2.6 trillion a year.

Mercator found that the spending power of Muslims worldwide represents a huge market largely untapped by the global banking industry; deployment of Islamic banking products and services cannot be done solely by financial institutions in Muslim countries and requires worldwide resources and coordination to fully succeed; banking guided by Islam is attracting the attention of non-Muslim consumers and banks due to its inherently stronger risk controls and transparency.

For more information, visit www.mercatoradvisorygroup.com.

Broken promises and paperless strategies

An October 2009 report from Aite Group LLC, The Broken Promise of Anytime, Anywhere Card Payments: The Experience of the U.S. Cardholder Abroad, assesses the costs assumed by the bankcard industry when U.S. consumers experience difficulties making payments overseas.

It is based on a September 2009 survey of 1,019 U.S. credit cardholders who traveled to countries other than Canada, the Caribbean and Mexico between 2006 and 2009.

The survey revealed that over the past three years, almost 50 percent of respondents reported some problem using a U.S. payment card; 62 percent of respondents reported using their payment cards less as a result of problems overseas; the U.S. card industry missed out on nearly $3.9 billion in transactions and $447 million in additional revenues as a result of these lost card payments.

In Beyond Check Imaging: Reaping the Benefits of a Paperless Branch, published in November 2009, Aite discusses the use of paper in bank branch processes, sheds light on the transition from paper to electronic processes within the branch channel and highlights the benefits U.S. banks can gain from adopting comprehensive, paperless strategies.

Aite determined that opportunities exist for deployment of electronic processes such as automated workflow, audit trails for documents and tracking of internal processes. Also, paperless solutions help mitigate fraud, assist with achieving compliance standards, prepare banks for the audit process, reduce costs and cut down or eliminate misplaced or lost data.

For more information, visit www.aitegroup.com.

Fraud overviews and trend projections

A Smart Card Alliance white paper entitled Fraud in the U.S. Payments Industry: Fraud Mitigation and Prevention Measures in Use and Chip Card Technology Impact on Fraud states that U.S. payment fraud is expected to rise unless the industry looks toward new technologies like contactless and mobile payments.

The report provides an overview of current card fraud levels in the United States and projected trends based on the move to Europay, MasterCard Worldwide and Visa Inc. standards.

Approaches used by the U.S. payments industry to combat fraud are described, along with a discussion of how new technologies and processes help to mitigate fraud losses.

The SCA also found that as of June 2009, more than 90 million contactless cards, fobs and tags had been issued and are accepted at more than 130,000 merchant locations throughout the United States; the SCA does not see protection of data or better fraud detection techniques as solutions to the problem.

Rather, the solution is to replace static data with dynamic data because it renders stolen account or transaction information useless.

For more information, visit www.smartcardalliance.org. end of article

The Green Sheet Inc. is now a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals. Click here for more information.

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