The battle waged over Prime Day payments

Register now

When Amazon was busy driving traffic to its site — and the likes of Walmart and Best Buy were aggressively trying to pull shoppers away — it also invited several issuers to compete to be the top-of-wallet card for Prime Day spending.

Issuers such as Synchrony, Discover, Chase and American Express tried something unconventional with their rewards on Prime Day, with the hope that they would benefit from the massive surge in spending. While most cards offer consistent rewards that don't vary from month to month, these issuers chose to add new perks that lasted only during Amazon's two-day sale.

Amazon's own store card, issued by Synchrony, was among the most brazen: Instead of the 5% cash-back reward for Prime members' Amazon purchases, it offered 6% for the duration of the two-day shopping event.

"This is the first time we have the additional 1% back on all purchases," said Synchrony spokesperson Angie Hu. "Synchrony's flexible technology platform supports this kind of promotional offer, as our focus is on agile technology that can support our partners' business needs."

The Amazon Visa card, issued by JPMorgan Chase, offered a similar deal.

Amazon also markets the Discover it card, and Discover's promotion competed with Amazon's own branded cards by offering a $10 credit to spend on Amazon Prime Day if the consumer used Discover for a purchase of $30 or more. Discover also had an offer of 20% off total purchases, maxing out at $50 off.

Targeted offers from Amex and Chase also offered discounts of $15 to $30 off purchases of $60 or more; and Discover and Amex offered 25% discounts on Amazon devices, according to the website DansDeals.

Amazon may not care which card a consumer picks, as long as these deals attract more shoppers to its site on Prime Day. And the deals showcase Amazon's deep integration with various issuers' rewards programs.

In 2010 Amazon began allowing Amex cardholders to redeem rewards points directly during checkout, relying on the Pay with Points feature Amex launched in 2005.

But Amazon still had a very clunky process for redeeming rewards on its checkout page. Users of its Chase Visa card had to request a mailed gift certificate in increments of $25, or 2,500 points, to use on Amazon's site (or wait to accrue 5,000 points for cash back).

Amazon added a feature in July 2011 that allowed Chase Visa users to spend points directly during checkout, in any amount down to a single penny. The feature has added more cards over the years and is a standard part of Amazon's checkout process.

All of the Prime Day promotions are tied to card issuers that had existing relationships with Amazon, but more issuers could hold their own promotion to compete with Amazon's partners, if they chose to do so.

"If Discover wanted to do something like that on their own, and not in conjunction with Amazon, they could say for anything bought from Amazon for more than $100 with your Discover card, we will give you $10 back, or some number of points," said Tim Sloane, director of emerging technologies advisory services for Boston-based Mercator Advisory Group. "That would be a deal orchestrated on the back end of the transaction."

This is different from what Synchrony did to enable an additional 1% rewards for two days through special coding, Sloane said. "Their authorization engine has the ability to look at who is the merchant, what was the amount, what time and day of the week … and then be able to apply a discount to that particular transaction."

It's typically done through a technology process called Restrictive Authorization Network, which handles much of that process in milliseconds, Sloane said.

"Restrictive Authorization Network is something that merchants become interested in, but they have to find someone who can do it for them on their network," he added.

In some cases, a merchant's network is not set up to operate in such a manner that special deals on cards for specific time frames can be deployed.

"They get their stores set up and connect to networks and then, later, they start thinking it would be good to do special promos at specific days and times," Sloane said. "But they find out they had built an infrastructure that would make something like that difficult."

Synchrony is able to set up discounts at certain stores for certain time periods on certain cards, usually to help the merchant drive customers into a store during traditionally slow periods, Sloane added.

Kate Fitzgerald contributed to this article.

For reprint and licensing requests for this article, click here.
Loyalty and rewards Credit cards Retailers Consumer banking Amazon Synchrony Discover JPMorgan Chase American Express
MORE FROM PAYMENTSSOURCE