First National Bank of Omaha will be the first major financial institution to extend Cardlytics Inc.’s merchant-funded bankcard rewards to credit cardholders, adding it to the company’s rewards service the issuer already plans to offer to its prepaid and debit cardholders, Cardlytics announced this week.
The rewards program enables cardholders to receive cash back on specific merchant-promoted purchases available through the bank’s online banking website using a credit, debit or prepaid card.
Launched in 2008 by two former Capital One Financial Corp. executives, Atlanta-based Cardlytics says 30 million consumers participate in its rewards programs and expects that number to double by mid-2011.
Birmingham, Ala.-based Regions Financial Corp. last month announced it is offering the program to its debit card customers (see story). Several other large institutions are testing the program and plan to announce similar rollouts in the next several months, Lynn Laube, president and co-founder of the company, tells PaymentsSource.
First National Bank of Omaha is a subsidiary of First National Bank of Nebraska Inc., which last year ranked 12th among bankcard issuers in total receivables, according to PaymentsSource data.
The company this year began marketing Cardlytics’ merchant-funded rewards to its debit and prepaid customers, enabling customers to “realize tangible rewards on purchases they make on a regular basis,” Scott Eulie, president of the bank’s credit card unit, said in a statement.
Most of Cardlytics’ clients are offering the service to debit cardholders, but prepaid and credit cards are attracting growing interest from banks, Laube says. “We expect to see more credit card program adoption over the next year” as more merchants test it, she says.
Typical merchant offers are about 10% off on specific items, but offers have ranged as high as 30% cash back on specific purchases, Cardlytics says.
Merchants craft offers based on individual cardholders’ past purchases, with the goal of stimulating spending in specific categories. The majority of offers are good for in-store purchases; offers also are good for online purchases, according to Laube.
To initiate a purchase, consumers click on a merchant offer within their banks’ online website and receive the merchant-funded cash-back rewards in their accounts within 60 days of the purchase.
Banks pay nothing to participate in the program. The system, which integrates with banks’ existing back-office systems, takes about four months to set up, Laube says.
“One of the biggest appeals of our program to merchants is their ability to control the offers based on data so they can see exactly how an offer performed,” she says.
The response rate for most cardholders at banks offering its rewards programs is about 30%, and the bank customer opt-out rate is about 5%, she says.
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