Tempo Payments Inc. is on the verge of partnering with more for-profit organizations wanting to use its affinity decoupled debit card program.
Convenience-store chain QuikTrip Corp. Aug. 3 announced an expanded debit card rewards program that leverages Tempo’s platform, which enables institutions to issue debit cards that access customers’ checking accounts at other banks. The move highlights Tempo’s effort to illustrate how an affinity debit card program can benefit retailers that attract the same customers who make frequent transactions and who can benefit from rewards, Mike Grossman, Tempo CEO, tells PaymentsSource.
The deal also marks the first time Tempo is partnering with Discover Financial Services. Tempo also works with MasterCard Worldwide. Grossman expressed a desire to work with more than one network
First Bank & Trust, a Brooking, S.D.-based financial institution, issues the card, and Tempo settles the transactions over the automated clearinghouse system. Discover routes the transactions over its network for authorization.
QuikTrip’s program, which previously used MasterCard-branded cards under Tempo’s system, offers cardholders a fuel-purchase discount of 5 cents per gallon at QuikTrip locations for the first 90 days after card activation, after which the discount drops to 2 cents per gallon.
Cardholders who activate the card before Nov. 30 will qualify for a 10 cents-per-gallon fuel discount for the first 90 days.
In addition, all cards qualify for quarterly cash-back rewards for purchases made at participating merchants outside of QuikTrip. Cardholders earn 2% of the sale, according to QuikTrip spokesperson Mike Thornbrugh, who could not provide a list of merchants. A press release states the card can be used at millions of merchant locations.
The lure of cash-back rewards should help the program thrive, says Bill McCracken, CEO of Synergistics Research Corp. “The consumer is coming back to basics, and the basics are cash,” he says.
A recent Synergistics survey found consumers prefer cash-back rewards to points or miles (see story).
Consumers are in “savings mode,” which makes cash-back a more-attractive incentive, McCracken says. “What Tempo has done here very accurately reflects the mood of the consumer,” he adds.
Tempo soon will announce partnerships with other for-profit organizations, including other convenience-store chains, Grossman says. He believes this type of program resonates better with convenience stores trying to reduce transaction costs and to build better brand loyalty.
Merchants pay about 0.5% to 0.75% of the sale for an ACH-based debit card transaction, but the actual rates vary by program, Grossman told PaymentsSource earlier this year (see story).
By comparison, merchants typically pay 2% to 3% of the sale for a credit card transaction, and those rates also vary significantly depending on the size and type of merchant.
Tempo initially focused on partnering with nonprofit organizations that wanted to give its supporters another way to donate to a particular cause, including the Arthritis Foundation, the Breast Cancer Fund, Doctors Without Borders, Greenpeace, In Defense of Animals, the Manilow Fund for Health and Hope, Surfrider Foundation and World Emergency Relief.
Tempo provides such organizations 0.5% of each signature-debit sale and 0.1% of every PIN-debit purchase amount.
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