Rewards for debit card users are alive and still available through traditional banks and credit unions, the financial institutions (FIs), although they are not as plentiful as they were prior to 2010 when debit card interchange was unregulated. Large and small FIs still offer these rewards, although rewards are increasingly likely to come in the form of a discount on a specific purchase funded by a merchant and programs based on points accumulation now require consumers to spend more dollars to earn a single point.

The reality of declining product profit margins has debit card issuers thinking about how to achieve cost savings in their rewards programs without disappointing loyal users. Buying the services of a loyalty platform, consistently communicating its benefits, and fulfilling the rewards is significant expense exemplified by programs costing more than $50.00 per enrolled card annually. Rewards have not disappeared because taking them away from a current cardholder is too risky to the relationship. Competition from other financial institutions, credit card issuers, and retailers that have payment loyalty programs keeps bankers from pulling the plug.

In the Mercator Advisory Group research report, Debit Rewards: Taking a Focused Approach, we review U.S. debit rewards programs of covered and exempt financial institutions as well as traditional and digital-only banks. We also examine the types of rewards used, the demographics of consumers motivated by debit rewards, and ways that financial institutions can approach balancing the expense and the return of debit card rewards they offer.