Thursday, October 13, 2011

Credit Card Processing Rewards

credit card processing rewardsRecently most of the credit card processing news we have been hearing about has focused on the Durbin Amendment and the reduction of debit card fees.  As a result, banks are trying to recover their potential lost revenue by pretty much annihilating all the debit rewards programs which changing the way consumers handle their spending.
Debit card programs were so attractive to consumers at one point that they made more sense to use as opposed to cash.  Points and dollars were adding up so fast creating a too good to be scenario for consumers.  But just as that wave has come and gone, it looks like credit card processing just got a little bit interesting again.  We are seeing credit card programs riding the new wave for spenders.
Not long ago, the only company really focused on credit rewards was Discover which had a generous 2% cash back feature on transactions.  But over the coming months we will hear more and more about other companies following suit and consumers will cash in.  Why?
Finally credit card processing companies are trying to lure in customers with great credit.  Customers like this have great repayment records but still carry balances which translates into revenue for the issuer.  Competition for this breed of client is competitive and banks will have to offer more than just mediocre customer service to look attractive.

Who Benefits From Credit Card Processing Rewards?

This move will also entice consumers to start using credit again.  The debit card programs bit into the market and in many respects retrained spenders to spend with either cash or debit.  Credit transactions were an afterthought because they could not compete with rewards programs nor the frequent discounts offered by merchants on cash transactions.
The new cash back credit cards have evolved a bit and will offer tiered rewards for certain types of spending.  General transactions will have the lowest value while groceries and fuel will each respectively be higher.  Some issuers will offer up to 5% cash back on specialty categories throughout the year in partnership with major retailers.  For example, Spring might be lawn and garden season while Summer might see higher rewards for home improvement spends.
It all sounds like great fun and great deals for savvy consumers and those who literally play their cards right will cash in.  Airline Miles and sign up bonuses will loom large before Christmas in order to get people spending on their new cards in time for the holidays but these offers are not for everyone.

Great Credit Will Get You Credit Card Processing Rewards

Those with bad credit need not apply.  Credit card processing companies are in it for the money and they are willing to part with a little to keep the type of customers they profit most from.  Poor credit not only is risk heavy, but believe it or not, revenue often suffers.  Charge offs and collections eat into the profits of credit card processing companies so they would much rather deal with client who spends often and repays bit by bit but does so on time