ary Carol Garrity, owner of Nell
Hill’s Home Emporium and two other
shops in Atchison, Kan., is affected by
card reward programs as both a
merchant and a consumer.
PHOTO BY SCOTT INDERMAUR
As a shop owner of 25 years, Garrity has
seen an increasing number of patrons opting to
pay with their credit cards. She supposes the
incentives, such as the cash-back or travel
rewards tied to both credit and debit cards, is one
of the reasons driving this trend.
“I know it motivates me personally,” says
Garrity, who just recently started using two air-
line reward cards.
Her enticement: “My girlfriends who own
businesses get to fly first-class to Europe.”
A long-time cardholder but recent reward
card loyalist, Garrity is just the kind of con-
sumer that card networks are hoping to attract.
Research shows those with reward credit and
debit cards use them more exclusively than
cards that don’t offer rewards, and reward card
transactions often replace cash, check and non-
reward card transactions, says Fumiko
Hayashi, a senior economist with the Federal
Reserve Bank of Kansas City.
Hayashi recently analyzed the effects of
credit and debit card rewards on consumers’
payment choices along with Andrew
Ching, assistant professor of
marketing at the University
is becoming diffi-
cult because most
have both credit and
debit cards,” Hayashi
says. “Payment card
issuers, therefore, are try-
ing to stimulate their exist-
ing customers’ card usage by
providing rewards. It’s an
incentive for consumers.”
And it appears to be working.
Deborah Hamilton starts every
day with a reward, in addition to her
ike so many of her customers, Mary Carol Garrity now charges
almost anything she can—including business expenses for her three
upscale furniture, home décor and giftware shops in
eastern Kansas—to either her Visa or American Express credit cards.
FALL 2006 . TEN
ISSUERS OFFER CARDHOLDERS INCENTIVES TO ENTICE LOYALTY
Her morning wa