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How to build successful payment card loyalty programmes

How to build successful payment card loyalty programmes

By Mehmet Sezgin, CEO, Garanti Payment Systems.

In Turkey, the number of credit cards has increased drastically in recent years and there are now 46 million credit cards in circulation in Turkey in the form of traditional credit and debit cards or as contactless cards made available through various channels. The number of credit and debit cards globally now stands at over 100 million and as a result, loyalty programmes and ease-of-use are more important than ever.

In order for banks to introduce solid loyalty programmes, it is important for them to understand the various consumer segments the credit or debit card will be targeting. Garanti Payment Systems realised that merging credit card benefits with a shopping card, offering cash-back reward "bonuses" that can be redeemed at merchant partners of the programme, was very attractive.

As a result, Turkey's first chip-based EMV-compatible, multi-brand card programme, BONUS, was introduced in 2000. Between 2000 and 2010, the number of BONUS cards in circulation climbed to 10 million globally, ensuring savings for credit card holders through accrued bonus points when shopping, while creating extra revenue for merchant partners.

Secondly, choose the right partners. In order for loyalty programmes to be as effective as possible, it is also crucial for banks to partner with companies that can add real value to the mix.

For example, GPS has partnered with Atasay Jewellery, one of Turkey’s biggest jewellery companies, to launch the world’s first credit card that allows consumers to redeem their bonus points in gold through every purchase made in the country or overseas.

The accumulated gold value can be redeemed in all Atasay jewellery stores or the company’s distributors in Turkey. Alternatively, Garanti customers are able to add the gold value to their existing BONUS card points to accumulate loyalty points and savings.

That way, consumers are able to increase their savings while moving from using cash to increasing their use of their credit cards. It also gives customers the opportunity to invest in the country’s preferred commodity - gold. With large amounts of inactive gold stock in the country, the card is another way to help stimulate the national economy by prompting the reintroduction of some of the inactive gold back into the market.

In order to illustrate the importance of good collaboration, GPS also partnered with local mobile phone operator Avea, to introduce an NFC-enabled SIM card, eliminating the need for NFC-compatible mobile phones.

Customers will be able to use their mobile phone to pay for items at retailers where contactless functionality is available but it can also be used as identification to gain access to buildings, as a ticket to football games or concerts, and to pay for items at numerous vending machines across Turkey.

Thirdly, availability is key. It is crucial to ensure that target segments are reached via the right channels to enable more widespread use of the bank cards. For example, GPS was the first issuer of contactless PayPass bank cards from MasterCard, which were then extended to the bank’s existing BONUS Trink cardholders.

This loyalty programme soon established itself as the benchmark loyalty card scheme not just for banks but also retailers in Turkey following its introduction in 2006. By adding further channels to the technology, MasterCard and GPS announced the launch of Europe’s first watch equipped with the PayPass contactless technology for small-value items.

This allows customers to pay for items quicker and more conveniently and is currently available across nearly 15,000 POS terminals in Turkey, including major names such as Burger King and Starbucks.

Always, customise your products. In a world where personalisation and customer loyalty has become crucial, Turkey spearheaded the Customer Managed Relations (CRM) era for credit cards with the launch of GPS’ Flexi card, a credit card with highly flexible features.

Flexi Card allows cardholders to create a personalised card including its own interest rate, reward system, card fee and own card design. In addition, loyalty points are awarded based on the frequency of use of the card, rather than income, and there is no expiration date for the extra points.

Finally, think outside the box. It is not just retailers that should be included in loyalty payment card programmes. In order to increase reach of credit and debit cards, banks should look to include other industries such as transport in the schemes. That way, cardholders are able to use their banking card as an e-ticket for public transport.

By knowing who you’re targeting, choosing the right channel and functionalities, banks will be able to increase their payment card loyalty and adoption levels at a time when new players are entering the banking market with seemingly attractive offers, notably increasing levels of competition.

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