Debit Card The Debit Card - Colloquy

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Debit Card The Debit Card - Colloquy

THE VOICE OF THE LOYALTY MARKETING INDUSTRY SINCE 1990 VOLUME 10, ISSUE 4, 2002

Caught in a war with

merchants over debit card

interchange fees, banks are

turning to loyalty programs

to help them win the

battle of the checkout lane.

But are customers

caught in the middle?

The Debit Card

(käl´a kwē) n. 1. A conversational

exchange; dialogue

Also in this issue ...

• COLLOQUY’s Debit Loyalty Survey • Technology: Reality Check at the POS

• International Report: Coalition Loyalty in Southeast Asia

• Online Exclusive: The COLLOQUY Interview with Wayne Malone, Citibank

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COLLOQUY 2

TOUCH COMMENTARY POINTS

When marketers attempt to pitch

the powers-that-be within their

organizations on the benefits of

a loyalty program, almost every

conversation starts with the CFO

proclaiming, “We don’t want to

do another points program.” The

underlying objections usually

include several of the old standbys,

from “We can’t afford the liability”

to “Everybody’s doing it and it just

doesn’t work.”

Sadly, the CFO is right. Most

programs today that use a

promotional currency use it as

little more than a tactic to deliver

deferred discounts. Program

members accrue points that are

converted into a certificate for a

discount on their next purchase.

The currency is used only to tally

purchases over a period of time

and to keep score until the required

threshold is reached. If you spend

$300, then you get a certificate for

$15 off your next purchase. If your

goal is to build customer loyalty,

then I’d object to this model as well.

Loyalty is about more than purchase

behavior. Loyalty is really about a

consumer’s engagement with the

brand. Yes, influencing purchase

behavior is definitely a desired

result. That result pales in

comparison, however, to behavior

more indicative of consumer loyalty:

customers sharing information,

responding to surveys, acting on

offers, alerting you to product or

service problems or, best of all,

becoming advocates for your products

or services. This combination of

behaviors truly defines loyalty.

Volume 10, Issue 4, 2002

TOUCH

It’s Not About Points—

Or Is It? By John Bartold

The true value of a promotional

currency, therefore, lies in its ability

to acknowledge customers who

support and adopt your brand.

A promotional currency allows

you to:

• Keep score: Everybody likes to

keep score; consumers especially

do. Have you ever listened in on

conversations at a customer service

counter? How often do you hear a

customer say, “Do you realize how

“If the promotional currency provides

a measure of a customer’s overall

engagement with your brand, then it

really isn’t a liability— it’s an asset.

It’s a visible expression of brand loyalty

and customer goodwill.”

much I spend here? I’ve been

shopping here for years. Surely

you can take care of [insert pressing

customer service complaint here].”

The problem is that the customer

is the only one who has been

keeping score— and she perceives

that the retailer hasn’t been paying

proper attention. A well-crafted

promotional currency brings the

customer’s value to light, for both

you and the customer, and enables

you to recognize the value of each

one of them.

• Separate the wheat from

the chaff: At the same time, a

promotional currency enables you

to separate those customers who

really support your brand from

those who cherry pick it. It can

separate the occasional discount

shoppers from the brand loyalists,

and do so with an appropriate

sense of balance. After all, even

discount shoppers can be

profitable if they’re frequent users

of your brand, as is the occasional

full-price shopper who responds

to your every request or offer.

• Measure lifetime value: A

promotional currency can be an

excellent measure of, or even a

replacement for, customer lifetime

value. That’s because the currency

provides a running score of your

total relationship with the customer

over time. It also provides a picture

of the total value of the customer’s

relationship with your brand. If

you zero the balance every time a

customer redeems, or if you

automatically issue a certificate

when a customer hits the magic

level, then you may lose track of

both the score and the customer.

• Communicate value to

customers: In any relationship,

people seek acknowledgement of

their importance and an exchange

of value. Customers are no different.

While they do receive value in the

products and services you offer,

they receive it at a price— the price

that you charge for those products or

services. How do you acknowledge

the value of those other loyal

behaviors we mentioned, and do

so over time? A promotional currency

Continued on page 15


POINTS

There’s a move afoot among

marketers looking to solidify

customer relationships— one

rooted in the concept of “surprise

and delight.” It works something

like this.

I’m a customer who is profitably

buying your product or service.

You want me to maintain this

behavior and possibly buy more.

You send me a gift of some sort—

a “thank you” card, a gift certificate,

maybe a pair of movie tickets. I’m

favorably impressed and buy more—

or, at the very least, I tell others

how great you are.

This approach is solidly grounded

in the need for an emotional

connection between brands and

consumers. Unfortunately, it also

floats adrift in the realities of

customer behavior.

More than once, I’ve been pleasantly

surprised by special recognition

gifts I’ve received from companies

with which I do business. A few

years ago, when I achieved

Platinum status with my favorite

hotel chain, they sent me a

Christmas gift of a nice shaving

kit, one that I still use today. It

was unexpected. It was thoughtful.

It got their logo in front of my

nose every morning.

But it also set an expectation that

I would get a gift every year—

after all, I perceive myself to be a

valuable customer, even if I’m not

staying quite as often as I used to.

I didn’t get another gift. In fact, I

found myself wondering what I

would get the next year, only to be

When “Surprise and Delight”

Doesn’t By Pat LaPointe

disappointed when nothing

arrived. Three years later, having

not received another gift despite

continued high levels of patronage,

I’m convinced that the hotel’s

affection for me was fleeting.

They must have been sending my

gift to someone more important

than me. And while I cannot honestly

claim causality, I’ve become more

amenable to staying with other

hotel chains.

“If we want customers to ‘be good,’

then we must tell them what ‘being

good’ means and reward the specific

behaviors we want to replicate as we

see them.”

This isn’t an isolated example.

Similar situations have occurred

in my relationships with airlines,

retailers, even my bank. The gifts

come as a reward for loyal patronage,

but then stop even if I continue my

behavior. And each time this cycle

repeats itself, I’m reminded of how

differently I view my relationship

with each company than they view it.

Some of the limitations of the

surprise-and-delight concept are:

• You pretend to care more than you

really do. You make an effort to

impress me with your appreciation,

but only with a token gift, and usually

only once or twice in a year.

• Your offer lacks continuity.

Despite the best intentions when

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News and Opinion from the

Front Lines of Customer Loyalty

embarking on this approach, staff

changes and circumstance rarely

provide more than an 18-month

lifespan for such initiatives.

Paradoxically, this is one of the

primary appeals of this approach

for marketers— the ability to exit

quickly and easily.

The recognition suffers from long

dry spells. If the gift arrives one

day each year, you assume the

halo will shine for 364 more days

(at least). This is an unrealistic

assumption given the barrage of

competitive messages and offers

targeted at me every day, not to

mention the inevitable servicedisappointment

I am likely to

experience at some point in the

course of my regular interactions

with you.

But the primary reason surpriseand-delight

fails as a long-term

plan for enhanced customer loyalty

is the lack of cause-and-effect on

an actionable level. I never know

for what specific behavior you are

rewarding me. Did I stay 10 extra

nights this year? Did I dine in the

hotel restaurant every stay? Or

was I simply “loyal?” What do I

have to do to get another gift?

Imagine raising children by only

telling them to “be good.” You

never instruct them to say “please”

or “thank you;” you never teach

them to clean up after themselves

or wash behind their ears; you

don’t emphasize the quality of

schoolwork or encourage imaginative

hobbies. Children who grow up in

Continued on page 15

Volume 10, Issue 4, 2002 COLLOQUY 3


COLLOQUY 4

STRATEGY

Winning the Debit Card

Tug of War By Rick Ferguson

Both a cost-saving vehicle for

banks and a convenience for

consumers, debit cards are an

ideal acquisition and retention

vehicle, and a perfect appetizer

to a broader, deeper relationship

with consumers. Recognizing this

opportunity, banks have turned

to loyalty to differentiate their

debit products and to “educate”

consumers about the benefits of

signature over PIN. But are they

going about loyalty in the right

way? And are they thinking far

enough ahead?

Volume 10, Issue 4, 2002

It’s a scenario common in today’s

retail world. Mr. Consumer takes

his cart full of purchases to the

checkout lane at Mega-Mart.

While the cashier rings them up,

Mr. Consumer waits patiently,

trying to avoid succumbing to

the impulse-buy enticements of

the candy display.

Then it comes time to pony up. Mr.

Consumer confidently produces his

Behemoth Bank Visa Check Card to

pay for his purchases. Although he

was reluctant to use the debit card

at first, he’s since come around; it’s

much easier to bust out the plastic

than it is to carry around a check

book, and the ability to get extra

cash at the checkout lane saves him

trips to the ATM. Even better, Visa’s

backing enables him to pay for

hotel stays and rental cars without

racking up finance charges on his

credit card. What’s not to love?

Then comes the fatal question. The

cashier fixes her steely gaze upon

our hapless consumer and asks,

“Will that be credit or debit, sir?”

Uh-oh. Nobody said there would

be a quiz.

Suddenly the glaring spotlight is

fixed inexorably upon our hero.

Credit or debit? What’s the

difference? Should he punch in

his PIN or sign for the purchase?

Why is he being forced to make

this decision? Is one

option better than the

other? Does one option cost

more than the other? And most

importantly for our purposes,

how do the consequences of

this decision affect Mr. Consumer’s

relationship with his bank?

The debit opportunity

This illustration demonstrates

both the promise and the peril of

the U.S. debit card market. On

the one hand, banks have at their

disposal an increasingly popular

and profitable banking product

that still offers plenty of room to

grow both market size and share.

On the other hand, consumers

have become embroiled in a tug of

war between issuers and merchants

over a counter-productive debate

about the benefits of signaturebased

versus PIN transactions.

“It’s confusing for customers,” says

Kristen Batteri, spokesperson for

J.P. Morgan Chase.

“[The debate] has created irrational

tension around the payment

experience,” said Dennis Lynch,

president and CEO of the NYCE

electronic fund transfer (EFT)

network at October’s ATM & Debit

Card Forum in New York City.

“This is not the place we want to be.”

So while it’s clear that the debit

product represents both a costsaving

vehicle for banks and a

convenience for consumers, the

players in this business (the issuers,

the network operators and the

merchants) have behaved in anything

but a customer-centric manner.

Rather, they’re contributing to the

confusion over the product itself

and risk creating disloyalty to both

the bank and the merchant because

of the PIN versus signature debate.


Recognizing this dilemma, many

banks have turned to loyalty to

differentiate their debit products in

the marketplace and to “educate”

consumers about the benefits of

signature over PIN. But are banks

going about loyalty in the right

way? And are they thinking far

enough ahead?

Few banks are truly affording

themselves of the opportunity

offered by the debit card explosion.

Far from being solely a source of

operational cost savings, debit can

be an entry point through which

banks can develop broader, deeper

relationships with best customers.

If banks are ever to achieve the

relationship banking model that

they’ve talked about for the last 20

years, then they would do well to

embrace debit card loyalty as a good

appetizer to that relationship, rather

than as a short-term way to squeeze

pennies out of debit transactions.

If the appetizer is tasty, after all,

consumers are more likely to stick

around for the main course.

Chase people,

not pennies

All interested parties agree on one

thing: debit card popularity continues

to soar. The Nilson Report expects

debit card transactions at the POS

to grow at a rate more than twoand-a-half

times that of credit card

transactions. By 2012, the Report

predicts, debit transaction volume

will actually exceed the volume of

credit card transactions. Nilson’s

prediction was followed by Visa

U.S.A.’s announcement that, for

first half of 2002, signature-based

transactions initiated with Visa

check cards actually exceeded the

number of purchases initiated with

Visa credit cards (3.04 billion

purchases vs. 2.96 billion purchases)

— even though Visa credit cards

actually outnumber Visa debit

cards two-to-one.

“We did a survey of fifty financial

institutions across the country

representing 80 million cardholders,”

says Cindy Ballard, executive vice

president of marketing for PULSE-

EFT. “The financial institutions

see growth in both signature and

PIN markets.”

“[The signature vs. PIN debate] has

created irrational tension around

the payment experience…This is

not the place we want to be.”

Dennis Lynch, president and CEO

of the NYCE EFT network

While debit’s growth is impressive,

enormous potential remains, as

paper-based transactions continue

to dominate the market.

According to the Federal Reserve,

cash and checks accounted for 63

percent of the dollar volume and

69 percent of the transaction volume

of POS purchases in 2001.

With debit’s successful introduction,

widespread acceptance among

consumers and ample opportunity

for continued growth, you’d think

that issuers would be doing everything

possible to grab a piece of

this expanding pie. Instead, the

scramble for interchange-fee pennies

has created the current rift between

issuers and merchants and resulted

in the issuers taking their eyes off the

ultimate prize: customer advocacy

and brand loyalty.

The crux of the debate is that

banks make a lot more money on

signature-based (or offline) debit

transactions, which run through

the Visa and MasterCard

networks, than they do on PINbased

(or online) transactions,

which run through the EFT

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networks. In fact, according to a

U.S. Bancorp Piper Jaffray survey

of the top 250 commercial banks, a

consumer making a debit purchase

with a signature rather than a PIN

can make a 400 percent difference

in the revenue amount for the bank.

That a bank makes money when

you sign for your debit card

purchase is not in itself a bad thing.

After all, the bank is providing a

service. In many cases— say,

when you’re visiting Montego Bay

during a cruise ship shore excursion

and want to purchase a couple of

pounds of Jamaican Blue Mountain

coffee without trying to convince

the vendor to accept a Traveler’s

Cheque— the power of the

association-backed signature

provides an enormous convenience

to the consumer. The ability to

make everyday or convenience

purchases anywhere Visa or

MasterCard is accepted, without

having to carry a lot of cash, write

a paper check or increase your

revolving credit balance, is as

responsible as anything else for

the explosion in debit card usage.

“I’m not sitting here trying to

espouse the benefits of Visa or

MasterCard,” says Ballard, “but

it’s not an easy thing to introduce

a new product like [debit].

Consumers can buy something

through their checking account—

with an electronic check if you

will— either in their neighborhood

or across the world with a signature

or a PIN. That capability wasn’t

built in a day.”

Volume 10, Issue 4, 2002 COLLOQUY 5


COLLOQUY 6

STRATEGY

The problem arises when you

try to purchase goods at a major

retailer, one that’s trying to keep

prices low for its customers by

minimizing fees that it must pass

on to them. While both offline and

online transactions cost the merchant

money, signature-based debit is

much more costly to the merchant

than PIN transactions due to those

pesky interchange fees (that portion

of the total transaction fee paid

by the merchant to the bank that

issued the card). While signaturebased

transactions cost merchants

between 1.25 and 1.38 percent of

the sale plus 10 cents (an average

of 62.6 cents per $40 ticket), PINbased

transactions, which are routed

through EFT networks such as

STAR, NYCE and PULSE, offer

significantly cheaper net fees of

15 to 45 cents per transaction.

This difference has caused each

camp to spend valuable time and

energy persuading customers to

make transactions in the manner

most profitable to them. Banks

encourage cardholders to push

the “credit” button at checkout

and sign for their purchase—

sometimes by dangling the carrot,

and sometimes by wielding the

stick. Merchants, meanwhile, aren’t

sitting back. Home Depot, Target,

Dillard’s, Wal-Mart, and other

prominent retailers are installing

debit POS terminals complete with

PIN pads in their stores. Store

clerks are being trained to instruct

customers to enter a PIN when

using their debit cards. Merchants

won’t give up that interchange fee

gap without a fight.

Which brings us back to Mr.

Consumer and his dilemma.

Where is he in this tug-of-war?

Right now, he’s feeling jerked

around and trying to avoid falling

into the mud pit.

Enter loyalty marketing

With opportunity abounding for

debit, some of the nation’s largest

banks have embraced loyalty as the

Volume 10, Issue 4, 2002

tactic of choice both for increasing

overall debit card usage and

encouraging offline transactions.

Their reasoning is simple— loyalty

works. The surest way to drive

customers to a preferred tender

type— in this case, debit— is to

enact sophisticated combinations

of recognition and reward.

Marketers have only to look to

the most successful credit card

reward programs as examples.

“Ultimately, reward programs will

benefit both online and signaturebased

cards in the long run,

because they bring both signature

and PIN-based debit to the forefront

and encourage the use of

debit cards all the way around,”

says Ballard. “They elevate the

usage of debit cards in the mind

of the consumer and the merchant.

Some reward programs may benefit

only signature transactions, but I

think everybody wins in the long run.”

But of the top 60 commercial debit

card issuers, only 14, or 23 percent,

offer any sort of loyalty incentive

for debit use. Of those 14 banks,

only a handful offer true loyalty

programs; the rest offer cash-back

rewards or anemic discount offers.

Part of the problem is that debit

has virtually no margin to work

with. So while the COLLOQUY

party line on a well-designed

program— adequate funding rates,

sophisticated combinations of hard

and soft benefits, aspirational

rewards and targeted, relevant

communication— may be the ideal

scenario, it’s much harder to justify

investment in a traditional proprietary

model when you can only afford

to fund the program at a rate of

25 or 50 basis points.

The result of this dilemma is that

banks have enacted debit loyalty

strategies in terms of their own

self-interest, rather than that of

their customers. We thus see

programs that rely on discounts,

that reward for signature-based

purchases only, and which offer

no doorway into a broader

relationship with the bank. In

most cases, the banks are using

loyalty to chase interchange-fee

pennies rather than drive overall

debit usage and enhance the

brand relationship.

There are exceptions. Chase’s

Leisure Rewards is one the few

programs in the market to

reward both signature and PIN

transactions. Chase’s Batteri

explains the reason why.

“We have always maintained that

the customer should be able to

choose which type of transaction he

2001 U.S. POS PAYMENT METHODS

60

50

40

30

20

10

0

Transactions

(Billions)

51

29.2

21.1

10.5

Cash Checks Credit Debit

Source: The Nilson Report, U.S. Bancorp Piper Jaffray

Cash and check transactions continued to rule the POS in 2001, which demonstrates that there’s still ample opportunity

for debit card growth.


or she is comfortable with, without

a fee or reward penalty,” says

Batteri. “The debit card is meant

to be an easy, convenient product.

Our customers are encouraged to

choose for themselves.”

That attitude makes Chase the

leader in customer-centric

philosophy. Still, the opportunity

abounds for someone to step to

the forefront with a holistic

approach to customer loyalty, one

that rewards customers for their

loyalty to the brand, rather than

to the discount, the airline or the

plastic. Here’s why debit loyalty

is a good place to start:

The Federal Reserve claims it

costs anywhere from $1 to $5 to

process a paper check. The

operational cost savings the bank

realizes by promoting debit usage

thus makes funding a loyalty

program possible. As this “loss

leader” characteristic of the debit

rewards model becomes more

obvious, more profitable products

may be introduced into the mix,

allowing a sustainable value

proposition, enhancing the bank’s

brand, and establishing a platform

for developing true customer

loyalty to the institution.

Debit loyalty programs in effect

function as coalition programs,

in that cardholders can earn

promotional currency anywhere

the debit card is accepted. The

velocity of earning offsets the low

funding rate in the consumer’s

eyes, thereby increasing the

perceived value of the program.

• While a signature loyalty

program can be profitable for the

bank, and is certainly better than

no retention program at all, the

truth is that customers don’t know

or care about the signature versus

PIN debate. Banks should thus

consider implementing a debit

loyalty program that encourages

overall debit usage, regardless of

transaction method. If the incen-

Continued on page 14

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SIGNATURE VS. PIN: WHO WINS?

Banks that either reward customers for choosing

signature-based debit transactions over PIN at the

point of sale, or that impose a fee on PIN-based

transactions, may be fighting a losing battle. Despite

great efforts on the part of banks to “educate”

consumers on the benefits of signature over PIN, all

signs point to PIN winning the tug of war in the long

run. Here are the reasons why:

Consumer preference: Consumers generally perceive

PIN transactions as moving them through the checkout

line faster. The ability to receive cash back on PIN transactions also fuels

their use. And then there’s the security factor: according to research by

Paymentech Inc., a Dallas-based merchant processor, 56 percent of debit

cardholders surveyed believe PIN transactions are more secure than

signatures. In addition, 36 percent of cardholders surveyed say they are

much more or somewhat more likely to shop at a store that accepts PINs.

A study by Collective Dynamics, LLC also reported that security was

important enough to consumers that they would be willing to pay an

additional $0.04 per transaction to use their PIN when making purchases.

PIN pad proliferation: Despite the implementation of online transaction

fees, signature reward programs and educational campaigns, the growth

in signature-based transactions will come primarily from the increasing

number of debit cards in the marketplace. Growth in the number of PIN

transactions, meanwhile, will come primarily from the impact of PIN

pad proliferation in the marketplace and from merchants steering their

customers toward PIN. Wal-Mart, Home Depot, Dillard’s and Office

Depot have all installed PIN pads in the past few years, and all are

training cashiers to prompt customers to enter their PIN numbers.

New technology: Most ominously for the issuers, STAR network

operator Concord EFS introduced a proprietary POS terminal, called

the STAR Universal Terminal, in July 2001. Built by Hypercom, the

terminal provides support for magnetic stripe cards, PIN-based debit

cards, smart cards and check verification. Merchants can also preload

software in the terminal to prompt for a PIN when a customer uses a

debit card. Widespread adoption of this terminal, with its obvious

benefits to merchants, will most likely reduce signature transactions

at the checkout counter.

Interestingly, the EFT networks and the two major credit issuers

are playing both sides of the fence. Visa (Interlink) and MasterCard

(Maestro) each own national EFT networks, and Pulse EFT recently

partnered with MasterCard to introduce Signature Points, a loyalty

program that allows PULSE’s 3,600 financial institution members

the opportunity to offer cardholders rewards for signature debits.

This situation suggests that the opportunity exists for all interested

parties— issuers, networks and merchants— to work together to

promote overall debit usage, regardless of transaction method. •

Volume 10, Issue 4, 2002 COLLOQUY 7


PROGRAM SPOTLIGHT

COLLOQUY 8

COLLOQUY’s Debit Loyalty Survey

Programs run the gamut from uninspired to inspiring

Are banks placing customers’

needs and desires at the center

of their debit marketing efforts?

A few banks have made important

strides in this direction. Others

have taken a few steps, but need

to pick up the pace. Others

haven’t even gotten out of the

La-Z-Boy. COLLOQUY gives you

the lowdown on the major debit

card programs.

Volume 10, Issue 4, 2002

Examining the debit marketing

strategies and retention efforts of

the top commercial banks reveals

a familiar pattern: those banks

generally known for doing things

right have taken the lead, while

those that are known for playing

catch-up continue to do so. Their

reliance on wielding the stick of

online debit transaction fees without

any sort of retention strategy leaves

them at a disadvantage.

Best-in-Class examples of debit

loyalty programs include J.P.

Morgan Chase’s Continental

Airlines Banking Card and Leisure

Rewards programs, as well as Bank

of America’s three airline check

cards (Alaska Airlines Mileage Plus,

U.S. Airways Dividend Miles, and

America West FlightFund). Each

of these programs rewards cardholders

with points or miles for all

transactions, rather than rewarding

only signature-based purchases.

A MasterCard debit program,

Leisure Rewards enables cardholders

to earn points for purchases made

by signature or PIN. The basic

program provides one point per

dollar charged to debit. Redemption

opportunities begin at 2,500 points

and range from free movie passes

to vacation packages. Gold and

Platinum cardholders receive

added benefits, including double

the manufacturer’s warranty,

roadside and travel assistance,

rental car insurance coverage

and concierge services.

In addition to Leisure Rewards, the

Continental Airlines Banking Card

rewards OnePass frequent-flyer

miles for all purchases, including

bill payments. With four tiers, the

program offers one mile for every

$1-$2 in purchases, regardless of

transaction type.

By Christine Klein

But there is a tradeoff for all of

that consumer freedom; unlike

credit card loyalty programs,

which are often free, debit card

programs are likely to have a

membership fee attached. Those

programs mentioned above all

include $30 annual fees.

No carrot, just the stick

Fortunately for consumers, the

number of banks that wield the

stick by hitting them with a fee

for online debit transactions has

stabilized. A recent study by Dove

Consulting Group revealed that

only 26 percent of issuers charge a

fee for online debit purchases; of

those banks, less than half charge

a fee across the board to all cardholders.

The rest levy the fee only

on low-volume, unprofitable

accounts. Most of these fees were

instituted four or five years ago,

when debit cards were just coming

into vogue.

The worst anti-customer policies

are enacted by those banks— and

you know who you are— who

wield the stick only, charging a

transaction fee for offline purchases

while offering no incentive to grow

debit card usage or promote brand

loyalty. These banks have a long

way to go before they can hunt

with the big dogs.

Some banks that do offer the carrot,

however, haven’t entirely forgone

use of the stick. Members of

Charter One’s terrific Mega

Rewards program, for example,

receive rewards for all signaturebased

transactions. If they use their

PIN, however, they’re rewarded

with a $1.00 fee.

And they’ve got company. In

March 2002, KeyCorp informed all

cardholders, including members of

their Key Growth Solutions program,


that a $0.25 fee would be imposed

immediately on all PIN debit

transactions. No offense intended,

according to KeyCorp spokeswoman

Jill Arslanian, who, in an

interview with American Banker,

stated, “Our number one priority

is educating our customers so they

can learn how to avoid the fee.”

Well, okay. But why not eliminate

the cost of educating customers,

and the risk of alienating them,

by eliminating the fee? To Key’s

credit, the bank doesn’t levy the

fee on its best customers.

Cash Back for signature

Cash-back rewards are short on

creativity but easy to implement,

which explains why a few banks

have turned to them to reward

cardholders for completing

signature transactions. Key Bank

and U.S. Bancorp have both

instituted debit reward programs

that provide tiered cash rewards

based on transaction volume.

Key Bank’s Key Growth Solutions

provides 0.25 percent cash back on

monthly purchases of up to $100;

0.50 percent cash back up to $300;

0.75 percent cash back up to $600;

and one percent back on monthly

purchases over $600. Only signature

transactions are rewarded.

U.S. Bancorp’s Checking that Pays

also provides cash back for

signature-only transactions.

Members are rewarded annually:

0.25 percent cash back for the first

$1,000; 0.50 percent for the second

$1,000; 0.75 percent for the third

$1,000; and one percent for all

purchases over $3,000. One question:

if you’re a U.S. Bankcorp customer,

which is more appealing to you:

the $30 annual reward you can

earn for your $3,000 in debit

purchases with Checking that Pays,

or the 1,500 miles you can earn

with the bank’s Northwest Airlines

WorldPerks check card?

Fifth Third Bank is testing a signature-based

MasterCard debit loyalty program at various

price points, but has no plans to roll out the

program to its entire card base.

Mileage awards

Because many of the leading credit

and debit card issuers already are

locked into long-term arrangements

with airlines, it’s increasingly difficult

for issuers to find airline partners.

That makes Citibank’s AAdvantage

debit card, introduced in January

2002, more attractive to the consumer.

Cardholders are rewarded one

mile for every $2 spent on signature

transactions. A $25 annual fee

(basic card) is partially offset by a

2,000-mile sign-up bonus.

The benefits of mileage rewards are

obvious: miles are still the most

irresistible currency out there. But

mileage programs are expensive to

operate, miles are becoming

increasingly difficult to redeem and

it’s difficult to expand the program by

adding partnerships. While current

debit mileage programs are proven

winners, it’ll be hard for another

bank to break into this select group.

Points for signatures

Launched in November 2000,

Charter One’s Mega Rewards is still

visit COLLOQUY online

www.colloquy.com

the biggest program in the market.

For a $25 annual fee, members

earn one point per $1 spent on all

signature-based transactions and

can choose from an attractive mix

of attainable and aspirational

rewards. The program would take

the best-in-class award hands

down if it rewarded all transactions,

rather than signature-based purchases

only. Still, it’s hard to argue with

success: the program helped

increase gross dollar purchases

from $250 billion to $300 billion in

2001. Participants are 50 percent

more active users of their debit

cards than nonmembers, and

members spend an average of

$40 more per month in debit

transactions than nonmembers.

Most importantly, Mega Rewards is

the only program in the continental

U.S. that uses bonus points to promote

other banking channels such as

online bill payment. Charter One

has considered adding bank product

discounts to its redemption catalog,

as well as offering bonus points for

Continued on page 15

Volume 10, Issue 4, 2002 COLLOQUY 9


COLLOQUY 10

TECHNOLOGY

Volume 10, Issue 4, 2002

Cashing Your Reality Check

Reconciling loyalty strategy with reality at the POS

Over the years, COLLOQUY has

written extensively about loyalty

program structures, funding rates,

communication plans, reward

content and structures, and so on.

We’ve written much less about the

technology required to implement

loyalty programs. We’re not alone,

however; no one else has written

much about loyalty technology,

either. This article is the first in a

multi-part series designed to help

you audit your organization’s

ability to support a loyalty program

(or to improve the one you have).

In this first installment, technology

editor Jim Kuschill looks at

POS systems.

The lack of readily available

information on technology

}requirements has allowed some

would-be loyalty marketers to

assume that these requirements

are fairly inconsequential. Most

effective loyalty programs, how

ever, require lots of technology—

often to the point of substantially

hindering the strategic vision.

A typical loyalty program requires:

the ability to identify members at

POS and your other sales channels,

usually with a membership card or

number; deployment of a call center

for member care; e-mail capabilities

for the call center; an IVR to help

limit call volume; a Web site for

member self-service; interface with

print partners for statements and

other forms of communication;

interface with awards suppliers;

and interface with a membership

card production partner. And don’t

forget about the software that

enables all these interfacing activities.

Of course, not all of these technologies

need be deployed in every loyalty

program. Certain problems don’t

By Jim Kuschill

exist in every industry or in every

implementation. But on the whole,

deployment is a complex activity.

When you’re floating the idea of

loyalty within your company,

you’ll hear cost mentioned— a lot.

While some organizations run a

loyalty program because they

“know” it works, most marketers

these days are held to strict

accountability. Unfortunately, most

CFOs look at loyalty programs as

cost centers rather than revenue

centers, ROI models notwithstanding.

As a result, cost containment is key

to almost all implementations.

Let’s start our review at the point

where marketing desires most

often crash into reality— the POS.

The holy grail of loyalty marketers,

of course, is the ability to provide

individualized recognition and

reward in real time. To do so, the

POS device must recognize an

individual, communicate that

recognition and their purchases

through a network to a hosting

location and then to sophisticated

software that produces a response.

That response then winds its way

back to the POS, at which point the

POS interprets the result and does

the right thing. And by the way,

this all needs to happen reliably,

every time and without error, in

just two or three seconds.

If your POS device is really a

computer in disguise, then you’re

in good shape. If your POS runs

Unix/Linux, Windows, or a

commercially available real-time

operating system, then you’re also

in good shape. If each of your store

locations is online over a dedicated

land or satellite circuit, one not

dedicated to credit authorization,

then you too are in good shape.

Finally, if you currently have some


way to get data from a central

location all the way to the individual

store POS, then you are indeed in

good shape.

But if your POS is not in good

shape, then you’ll have a lot more

trouble than you imagined.

A fundamental requirement of

running a loyalty program is the

ability to identify an individual.

Identification is most frequently

done via a unique number

assigned to that individual.

The identifier could be a membership

card, a key-chain dongle, or

any other thingamajig with a

number on it. The number can

be bar coded, magnetic striped,

or embedded in a chip— perhaps

a smart card or a radio frequency

identifier (RFID). In some cases,

members are identified via existing

credit or debit cards.

In any event, the POS must be

able to read the member’s number.

If you want to issue smart cards,

then you must install smart-card

readers at the POS. If you want to

use bar codes, then ensure that the

bar code can be read by your POS

systems. Most importantly, if you

have multiple POS systems, then

your solution must work on each

one. While evaluating your POS

options, you should also look at

your other channels, such as Web

and catalog. While not normally

as troubling as POS, you’ll likely

need to make changes to the

supporting software.

The rule here is to not set your heart

on the identifying technology until

you have definitively determined

your requirements. Unfortunately,

expanding your list of solutions is

expensive and could easily bankrupt

your loyalty budget. It may even

be possible that no technology will

exactly meet your requirements. At

this point, you aren’t completely

without options, but you can bet

that your ROI just took a hit.

Once you’ve settled on the

identification solution, then it’s

time to examine the POS software.

That software must allow you to

“tag” a transaction with the

member’s number. The best POS

software allows you to accept a

member number, or perhaps an

“advice” entry that serves the same

purpose. If not, then you still

might be in good shape if your

organization controls the POS

software. You can make the

required change yourself— if the

change doesn’t cost a ton of

“It may even be possible that no

technology will exactly meet your

requirements. At this point, you aren’t

completely without options, but you

can bet that your ROI just took a hit.”

money, if you can get it on the

priority list and if your POS release

cycle isn’t outside the loyalty

program’s launch window. Can

you say “snowball’s chance?”

If you’re currently unable to collect

member numbers at the POS, then

there are still a few low-percentage

options available— low-percentage

because they usurp an existing

facility for the purpose, and

because the person responsible for

that facility is going to look

askance at you and your request.

The icky options:

• Does your organization use

SKUs? You can create the loyalty

program as a “supplier” and issue

member numbers that look like

SKUs. The downside: product

people tend to dislike this option.

• Do your registers recognize

coupon numbers? You can issue

member numbers that look like

coupon numbers. The downside:

a lot of POS devices require that

visit COLLOQUY online

www.colloquy.com

coupons “do something,” like take

10 percent off the total.

• Does your organization have a

BIN? Will your register accept a

zero tender amount on the line?

Most don’t, and you likely shouldn’t.

• Does your organization support

gift cards? Will your register accept

a zero tender amount on a gift card?

• Do you ask for a zip code or

phone number during a transaction?

The nine digits of a member’s zip

code might serve as a temporary

membership number while the

POS software is being updated

and rolled out.

• Do you ask survey questions or

allow entry of a rebate code or…

you get the idea.

Of course, none of these solutions

is likely to create a receipt that

clearly identifies to the consumer

that their member number was

attached to the transaction. This

could increase the number of

member servicing calls, thus

increasing costs.

If you’ve exhausted all of your

options relative to the POS, then

you still have a solution: a standalone

terminal such as a VeriFone

or Hypercom. But getting the

member number into the POS is

only part of the solution. Next

time, we’ll look at how to use

stand-alone terminals, as well as

the remaining POS challenges. •

Jim Kuschill is COLLOQUY’s technology

editor. Look for part two of Jim’s POS audit

in the next issue.

Volume 10, Issue 4, 2002 COLLOQUY 11


INTERNATIONAL REPORT

COLLOQUY 12

The MoreRewards The Merrier

How an ambitious coalition has taken

Southeast Asia by storm

Founded in Singapore in 1997,

loyalty coalition MoreRewards

now operates in three Asian

countries and plans further

expansion. With a network of

over 50 merchant partners

that includes everyone from

British Petroleum to Pizza Hut,

the program proves that being

first to market with a thoroughly

tested coalition loyalty model

gives its operators and retail

partners an enormous advantage

over the competition.

Volume 10, Issue 4, 2002

Electronic Commerce Technology

Sdn Bhd, MoreReward’s parent

company, chose Singapore as the

coalition’s lead market and the

incubator in which to test the

program model before expanding

it to larger markets. As Singapore’s

first large-scale customer-loyalty

program, MoreRewards generated a

consumer response that far exceeded

the operators’ initial estimate of

165,000 members. Within the first

six months, the program grew to

225,000 members, and has since

exceeded 350,000 members for a 35

percent household penetration—

a percentage that doubled the

original expectation.

According to MoreRewards general

manager Johan Aris Ibrahim,

Singapore proved a fertile laboratory

for refining the coalition model in

Southeast Asia.

“Our market investigation and

analysis within the region led to

a number of findings that served

as the foundation for our business

model,” says Ibrahim. “We found

a tremendous need, demand, and

interest for customer loyalty program

solutions among retailers. The

value proposition inherent in a

coalition approach seemed to hold

the greatest appeal, and points

collection was preferable to

further discounting for the great

continuity and cost efficiency

that the model provided.”

A coalition program, however,

is only as strong as its merchant

partners. With considerable time

and effort, MoreRewards secured

some heavy hitters for its

September 1998 launch— Tops

Supermarkets, BP Oil, KFC, Pizza

Hut, and Kodak among them.

Coalition partners gain from the

significantly lower cost and

By Kate Eardly

reduced operational and administrative

hassle as compared to a

proprietary program. The tradeoff:

merchants must accept a coalition

environment, which means sharing

program brand identity and customer

relationships with the other coalition

partners. Ibrahim and his team

were able to convince their partners

to take the plunge.

“Interest in customer loyalty and

CRM was running very high, with

most companies having set that as

one of their top corporate priorities,”

says Ibrahim. “For our retail partners,

[our objective is to] bring them

more customers, on a more frequent

basis, who spend more with them

with each transaction. We must

also be able to track, measure,

and show them results.”

MoreRewards provides a classic mix

of hard and soft benefits. Members

earn points for their purchases at

participating merchants. Points are

then exchanged for items in the

program’s annual awards catalog

or for a continuous number of Hot

Value Deals. Soft benefits come in

many forms, including special low

entrance fees to major attractions

such as the Singapore Zoo,

reduced rates for insurance,

magazine subscriptions and car

rallies, and early opportunities at

gourmet dining establishments

and selected shows.

There is always something

special and new going on to

keep our members interested

and feeling positive about the

program,” says Ibrahim.

While their preliminary research

indicated high interest in travel

and leisure rewards, Ibrahim’s

team also found travel alone

wouldn’t be enough to foster

continued participation. A solid


ewards catalog, they knew, should

contain the right mix of attainable

and aspirational rewards.

The relatively high cost for

anything meaningful in [travel]

would mean too high a minimum

points threshold required to earn

that all-important first reward,”

says Ibrahim. “We knew that, if

we couldn’t deliver desirable

awards to members within a

reasonable period and for a

realistic amount of effort, we

would lose their interest.”

The rewards catalog thus contains

a combination of personal and

household merchandise awards

and travel/leisure awards, giving

members more than 150 different

reward options. That mix is key to

the program’s success, says Ibrahim.

“[Members can] earn something

decent early on,” says Ibrahim,

“which is essential to providing

assurance that our program

delivers on its promise.”

Program members aren’t the only

beneficiaries of the coalition.

Merchant partners also benefit

from the invaluable customer

knowledge gained through

MoreRewards, including purchasing

habits and behavioral patterns of

customers. The program operates a

relational database and can analyze

the habits of both individuals and

member segments.

“We know [the merchants’] best

and most valuable customers,

and can cluster and profile them

by segment and demographics,”

says Ibrahim. “We can then

provide targeted reach on an

individual member basis for

special announcements, offers

and recognition.”

The key to using the data effectively,

Ibrahim says, is spelling out who

owns the customer data, who has

access to it and how it can be used.

Data ownership is one of the biggest

challenges for coalition designers.

MoreRewards Singapore has exceeded 350,000 members for a 35 percent household

penetration, a percentage double that of the original expectation.

“Participating merchant partners

require adequate protection for their

proprietary customer transaction

data,” says Ibrahim, “while at the

same time requiring sufficient

access to member data in order to

effectively mine the program database

for marketing purposes.”

Loyalty marketing in Asia presents

unique challenges, not the least of

which is moving the high interest

in customer loyalty and CRM

beyond mere lip service. Ibrahim’s

task was to convince businesses of

the wisdom of getting ahead of the

competition in the arena of customer

knowledge, understanding, access

and influence, and of avoiding the

costly and unenviable position of

playing catch up.

“[The hesitation] inevitably comes

down to cost,” says Ibrahim. “So

far, it has proven much easier

dealing with major global marketers

than it has with privately-owned or

family-controlled local businesses.

And in Asia, there is still a great

preponderance of the latter. The

interest and perceived value is

definitely there. The challenge is

convincing them that their return

on investment prospects are good

and far outweigh the risks of

failure or inaction.”

The success of MoreRewards in

Singapore has given the company

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www.colloquy.com

the impetus needed to role out

their coalition model in other

Asian markets. The Malaysian arm,

RealRewards, launched in 2001 with

14 sponsors, including Telekom

Malaysia and Petronas, the national

oil company. The program now

boasts 35 service partners with a

membership of 2.6 million households,

more than half the total

in Malaysia.

By the end of 2004, MoreRewards

Thailand aims to have 30 to 35

partners covering the food,

clothing, retail, gasoline, finance

and telecommunications

industries. The company is also

working on expansion into China

and Indonesia. Ibrahim is

convinced that the model will

meet with continued success.

The advantage of a good coalition

program lies in the value proposition

it holds for both consumers and

participating merchants,” Ibrahim

says. “Consumers gain more and

are influenced more because they

have more places to earn points,

thereby collecting more valuable

rewards much faster.” •

Kate Eardly is a contributing editor

to COLLOQUY.

Volume 10, Issue 4, 2002 COLLOQUY 13


COLLOQUY 14

STRATEGY

Tug of War

Continued from page 7

tive to use the card is strong

enough, increase in overall debit

card usage will offset the loss in

interchange fee revenue.

• An untapped vein of lucrative

repeat debit usage lies in the area

of recurring monthly payments.

Banks running a debit loyalty

program should consider bonusing

those cardholders who pay utility

bills, cable bills, car payments or

any other recurring payment with

their debit card. Better yet, form

strategic partnerships with these

companies to offset program cost

and sweeten the offer for consumers

— after all, it costs the phone

company money to process a paper

check, too. Partnerships increase

the velocity of earning and help

the program achieve “critical

mass” in the eyes of consumers.

• Finally, consider debit loyalty

as an entry portal into real brand

loyalty. Debit cards are not, after

all, a stand-alone retail banking

line of business; they’re a valueadd

to a checking account, the

opening of which is often the first

step in building a broader banking

relationship with a customer. If

the average household has two

relationships with its primary bank

and spreads its other financial

services business over other

providers, then the debit card

relationship represents a true

opportunity. Properly designed,

with tiered benefits based on the

breadth and depth of the relationship,

your debit loyalty program can

do your cross-selling for you.

The proverbial

win-win scenario

Although some analysts think that

debit growth has peaked, most

experts see continued expansion.

A recent PULSE survey of fifty

financial institutions, representing

80 million cardholders throughout

Volume 10, Issue 4, 2002

the U.S., indicated that respondents

anticipate a 21 percent growth in

online transactions and a 16 percent

increase in offline transactions

through 2003. This growth will

prompt an increasing number of

banks to turn to loyalty programs

to help them grab as large a slice

of the pie as possible.

How many of them will

succeed, however, remains to

be seen. The stakes are high; to

win the pot, any issuer launching

a debit card rewards program

should already have Stage Two

and Three plans ready for launch

and deployment. As the customer

becomes invested in the program

and his relationship with the bank

deepens, the bank can introduce

more profitable products into

the mix and cultivate strategic

partnerships. The result: a

sustainable value proposition, the

enhancement of the bank’s brand,

and the establishment of a platform

for developing true customer

loyalty to the institution.

Given that scenario, Mr. Consumer

will have a much better feeling

about his bank the next time he’s

asked if he’d prefer debit or credit.

Chances are, his bank will have a

better feeling about the situation, too.

“When you make things easy and

add value by offering a great

reward program,” says Chase’s

Batteri, “then you’re going to have

a satisfied customer.” •

Rick Ferguson is the editorial director for

COLLOQUY.

THE “HONOR ALL

CARDS” SUIT

In 1996, prominent retailers

including Wal-Mart, Sears,

Circuit City and The Limited,

as well as the National Retail

Federation and other trade associations,

filed a lawsuit against Visa U.S.A.

and MasterCard International. The

suit alleges that the associations’

“honor all cards” rule, which forces

merchants who accept Visa and

MasterCard credit cards to also

accept their branded debit cards,

violates federal antitrust laws.

In June of 2002, the U.S. Supreme

Court rejected without comment Visa

and MasterCard’s petition to overturn

a lower court decision awarding

class action status to the lawsuit. This

decision clears the way for as many

as four million merchants to join the

suit against the two associations;

plaintiffs are seeking damages of

$13.1 to $15.8 billion. The jury trial

is scheduled to begin in April 2003.

The outcome of this trial could have

widespread ramifications for debit

card loyalty. Here’s a look at three

possible outcomes:

The merchants win: If the “honor all

cards” rule is deemed anti-competitive,

signature-based loyalty programs

could go the way of the dodo bird,

as their major source of funding—

high interchange fees— dries up.

Programs that remain could institute

higher membership fees to make up

the difference.

The associations win: If Visa and

MasterCard prevail, banks may end

up at war for share of wallet with

merchants who institute their own

loyalty programs to encourage PIN

use. Merchants, who have more

control over customers at the point

of sale, may have the upper hand

in this scenario.

Neither side wins: In a compromise

solution, merchants continue to

honor all cards while the associations

lower interchange fees. This scenario

is perhaps the best for customers,

as banks loosen the reigns on PIN

transactions and institute loyalty

programs that reward both types. •


It’s Not About Points

Continued from page 2

does the job for you, and communicates

that value to customers.

• Retain brand loyalty as an asset:

Yes, the accountants will want

you to accrue for the value of all

promotional currency you issue.

But what does that liability really

represent? If the currency represents

only deferred discounts, then maybe

it really isn’t valuable enough to

justify carrying it on the books. If,

however, the currency provides a

measure of a customer’s overall

engagement with your brand, then

it becomes very valuable indeed.

Then the currency really isn’t a

liability— it’s an asset. It’s a visible

expression of brand loyalty and

customer goodwill.

So your CFO is right: loyalty

really isn’t about points. It’s about

establishing a platform to measure

the value of the relationship

between you and your customers.

It’s about expressing that relationship

to your customers and participating

in a mutually beneficial exchange

of value. Points are merely a means

to that end. •

John Bartold is a contributing editor to

COLLOQUY and a senior member of

the COLLOQUY faculty.

FOR DAILY BREAKING

NEWS ON LOYALTY

MARKETING, CRM AND

RELATED TOPICS, VISIT

US ONLINE AT

www.colloquy.com

Surprise and Delight

Continued from page 3

this environment would be incapable

of “being good” because they don’t

understand what “good” means.

So how can we expect customers

to continue to “be good” by only

sending them an occasional, vague

hint that they’re appreciated?

If we want customers to “be good,”

then we must tell them what

“being good” means and reward

the specific behaviors we want to

replicate as we see them. That

doesn’t mean bribery; it means

positive behavior reinforcement.

You must recognize the value of

every profitable transaction they

make. Set milestones and reward

achievement. Establish a clear, open,

mutually understood metric for

what constitutes “good” behavior.

At their core, long-term, profitable

customer relationships include a

high level of satisfaction with your

product or service. Without this

satisfaction, no marketing stimulus

will be successful over time.

Creating a more profitable behavior

pattern involves reinforcing this

satisfaction again and again while

constantly improving the value

proposition for the customer. This

process offers a combination of

tangible value delivered according to

a public algorithm, with emotional

support allowing for the importance

of the individual customer.

Surprise-and-delight is an effective

marketing tactic that plays a role in

a much larger relationship plan.

It’s an element of an effective

recognition and reward strategy—

but not a shortcut to one. •

Pat LaPointe is managing director of

Marketing NPV, a consulting company

focused on measuring customer retention.

visit COLLOQUY online

www.colloquy.com

Debit Survey

Continued from page 9

opening up a CD or establishing a

home equity line of credit.

Fifth Third Bank is also testing a

new program for both credit and

debit cards at varying price points

from free to $29. Credit cardholders

earn one point for each $1 spent,

while debit cardholders earn one

point for each $2 spent. The

program is designed around

Fifth Third’s MasterCard credit

card base and rewards only

signature-based transactions.

Fifth Third vice president Jeff

Trachtman says that the bank’s

reliance on MasterCard precludes

it from enacting a program that

rewards all transactions.

“In an effort to keep cost and

maintenance low,“ says Trachtman,

“and because MasterCard pulls all

our transactions off their clearing

and settlement system for point

accumulation, reporting and

redemption, any transactions that

are not processed by MasterCard

cannot be fed into the program.”

Fifth Third’s program is geared

mostly to its credit card portfolio,

and the bank has no plans to roll

it out to its entire debit card base.

Still, credit Trachtman with

understanding that relationship

banking is about more than credit

or debit, signature or PIN.

“As a relationship bank, we don’t

worry about whether a customer

chooses to pay with a credit card

versus a debit card,” says Trachtman.

“As long as they’re using a Fifth

Third card, we’re accomplishing our

goal of deepening our relationship

with our customers.” •

Christine Klein is a contributing editor

to COLLOQUY.

Volume 10, Issue 4, 2002 COLLOQUY 15


SHAMELESS PLUG

An Embarrassment

of Riches

The COLLOQUY Laws of Debit Card Loyalty

COLLOQUY 16

www.colloquy.com

Timely. Opinionated. Essential.

Volume 10, Issue 4 2002

If you’re here because you just

read all 16 pages of this issue,

then you’ve but scratched the

surface of the wealth of

information on debit card loyalty

programs compiled by the crack

staff at COLLOQUY. For those

of you who simply can’t get

enough, we’ve assembled for

you our complete guide to debit

card loyalty, available only at

www.colloquy.com. Online

you’ll find:

For the discriminating debit product manager, we present the seven

essential elements for a successful debit card loyalty program. Clip them,

save them, stick them on a PowerPoint presentation— just don’t leave

your office without them.

COLLOQUY’s Debit Program Survey

Featuring in-depth summaries of the top debit loyalty programs, including:

• Bank of America • Fifth Third Bank

• Charter One Financial • Key Bank

• Chase Bank • U.S. Bank

• Citibank

The COLLOQUY Interview: Wayne Malone, Citibank

Malone, who’s responsible for Citibank’s distribution channel strategy

and the management of over four million debit and ATM cards, recently

sat down with COLLOQUY to discuss Citibank’s debit card strategy and

the broader issues surrounding the debit card market.

And while you’re online, check out COLLOQUY’s standard package

of breaking news, program summaries, back issues, book reviews and

conference information. Then maybe you too can take home a shopping

cart full of cash.

The voice of the loyalty-marketing industry

since 1990, COLLOQUY consolidates information

and provides insight on effective loyalty-marketing

programs across all industries, around the globe.

Reader participation is invited.

Editorial Director: Rick Ferguson

Contributing Editors: John Bartold

Kate Eardly

Christine Klein

Technology Editor: Jim Kuschill

Web Marketing Manager: Colleen Berliner

Art Director: Karen Fulford

Subscriber Services: Kay Eichhorn

V.P. and General Manager: Michael T. Capizzi

6101 Meijer Drive

Milford, OH 45150

Telephone: 513.248.5910

Fax: 513.248.2672

E-mail: info@colloquy.com

www.colloquy.com

COLLOQUY is published by Frequency

Marketing, Inc., a global provider of loyaltymarketing

software and services. FMI offers

a complete range of strategic, technical and

operational solutions, including:

• Consultation on program strategy

and design

• Loyalty-marketing software and

technical support

• Database development, modeling

and maintenance

• Analytical assessment and

return-on-investment modeling

• Creative communications development

and fulfillment

• Member services via telephone, IVR,

Web and correspondence

• Partner and reward development

For more information, call

Steve Hunsche at 513.248.5011.

www.frequencymarketing.com

©FREQUENCY MARKETING, INC., 2002

PERMISSION TO REPRINT MAY BE

GRANTED UPON SPECIFIC REQUEST.

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