Resources

Tuesday, January 28th is International Data Privacy Day. We are proud to stand with the National Cyber Security Alliance, as a champion, to empower individuals and encourage businesses to respect privacy, safeguard data and enable trust.

With the California Consumer Privacy Act taking effect this year and other states considering similar legislation, data privacy will become a central issue for businesses in 2020. Yet while consumers conduct much of their lives on the internet via connected devices, few understand the critical issue of privacy and how their personal information is used, collected and shared by businesses.

We recognize a single entity cannot rid our economy of fraud, data breaches, and identity theft, nor will it happen overnight, however, we must all work together to protect consumers from these crimes. The payments industry is working hard to provide safer, more secure technologies to merchants and consumers, and in return, we would like others who say they share our vision to rise to the challenge with us.

We have long believed that collaboration is essential to the advancement of digital payments, as technological improvements cannot take hold if not supported and widely adopted throughout the payments ecosystem. Only by working together will we be able to improve the security of payments for all consumers.

Electronic Payments Coalition (EPC) released a report today on the value of debit and credit card rewards programs for merchants and consumers across all income levels. The report highlights that the vast majority of consumers own at least one credit card, including nearly two-thirds of adults earning less than $40,000 per year. This report shows that more than 90% of all credit cardholder spending was charged to rewards cards in 2016, and consumer preference for spending on rewards cards versus non-rewards cards holds true across income groups, with lower-income cardholders using their rewards cards for more than 70% of their spending.
The report also shows that rewards cards provide a host of benefits for merchants. Through a phenomenon known as “ticket lift,” where debit and credit card transactions are 2-4 times larger than cash transactions, and, relative to a non-rewards consumer credit card, rewards cards are associated with an average transaction size that is 25-60% higher.

“This report stands in line with what we’ve been saying since the Durbin Amendment was signed into law. The vast majority of consumers across all income levels use credit cards and prefer to use cards with rewards programs because of the value they provide, whether through convenience and security or by earning cash-back, airline miles, or hotel stays,” said Jeffrey A. Tassey, Chairman of the Board of EPC. “Retailers continuously criticize rewards programs for their higher interchange fees, when, in reality, the benefits outweigh the costs through increased sales, lower costs, faster transactions, and prompt and guaranteed payments. In fact, retailers often operate their own in-store rewards programs to drive net spending by incentivizing consumers to participate through lower prices and discounts at the shelves.”

The report also describes the dynamics of a two-sided market where a platform or service serves multiple end-users, which in the case of rewards cards includes cardholders and merchants. EPC found that the value derived from using the electronic payments system depends on the extent to which both groups participate. Ultimately, the price to participate balances the need to attract merchants with the need to increase the number of cardholders.

To view EPC’s Report on the value of rewards, click here.