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July 31, 2019updated 24 Jan 2022 6:25am

HSBC Rewards and Mastercard Pay with Rewards – one to watch

By Patrick Brusnahan

HSBC is the first bank in the UK to take up Mastercard’s Pay with Rewards platform for its new HSBC Rewards card.

One might be forgiven for suggesting: “And about time too!” The UK has, by contrast with a number of markets, been a marketing desert when it comes to rewards and loyalty programmes. There is, to be fair, a sort of an excuse in recent times: specifically, bank-funded reward schemes have struggled in the era of lower interchange.

The proposition is a compelling one and, like the best ideas, very simple. Mastercard Pay with Rewards enables real-time engagement with cardholders, increasing satisfaction and the likelihood of them using the card again.

For issuers, it means customer demand is met with a differentiated rewards programme that is convenient, flexible and offers instant gratification. Cardholders have the freedom to redeem rewards points for purchases at millions of eligible locations worldwide, in store or online.

In other markets, there is plenty of scope for UK banks to look for inspiration. And with the cards and payments sector awash with innovation, there remains the potential for a next generation of rewards programmes to be crafted involving card schemes, banks and merchants.

Citi rolls out Pay With Points

Banks in the UK might, for example, glance at Citi’s recently launched Pay With Points programme. This enables Citi ThankYou cardmembers to shop and redeem rewards on the spot. In addition, the Citi Pay With Points feature gives ThankYou cardmembers real-time alerts to redeem points. A wide range of eligible purchases will cover dining to groceries, entertainment, clothing and department stores.

The Citi Pay With Points feature applies to Prestige, Premier and Rewards+ customers, as well as ThankYou Preferred cardmembers. Members can choose to receive push notifications after an eligible purchase, or opt for notifications on a real-time, daily or weekly basis. They can also opt to receive alerts via email, and have the ability to set a minimum dollar amount of a purchase to prompt an alert.

In summary, Citi is the first major US issuer partnering with Mastercard that enables cardmembers to apply points in real time. The marketing pitch – and it seems a fair one – is that it offers the most convenient points-redemption options.

Consumers increasingly expect simple, seamless experiences in day-to-day transactions, and with a bit of investment and energy, there seems no reason why this cannot apply to rewards and loyalty programmes. But if any UK bank really wants to see a successful, long-running, well-marketed and crafted rewards programme, they need to look to RBC.

RBC Rewards, a world-class programme

The writer has asked, on a few occasions around the world on the banking conference circuit, if there is a better rewards programme than RBC’s. Thus far, no conference attendee or fellow speaker on the circuit has come up with a major bank programme that trumps it.

For the past 20 years, the bank has invested in making RBC Rewards a unique, market-leading programme. The scheme provides unparalleled value to Canadians, and is the largest proprietary rewards programme in Canada. In 2018 alone, RBC Rewards delivered over C$1bn in value to its members.

Membership of RBC Rewards now exceeds more than five million, and unlike traditional coalition programmes, RBC owns and controls its programme. This, says RBC, gives the bank the freedom to offer customers and partners unparalleled value.

RBC Rewards has been core to the bank’s market-leadership position in credit card balances and purchase volumes. It is a key part of RBC’s product value proposition and brand promise, and it has allowed the bank to organically grow its credit card portfolio at two to three times the rate of its competitors. Furthermore, it has been the backbone of its ongoing engagement and retention strategy.

The programme has evolved from a points-only loyalty programme to include points, cashback, discounts, special access, member experiences and events. The aim is to offer consumers a simple, relevant and highly personalised rewards experience. The programme is also truly omnichannel: members can engage with the bank at home on their mobile, PC or tablet. They can also engage in RBC branches and via its call centres and in retail stores across Canada.

It is stretching it a little to suggest that the HSBC deployment of Mastercard’s Pay with Rewards platform will be a game changer, or lead to growth in market share in the way that RBC has strengthened its enviable metrics – in part as a result of its rewards strategy. It is, however, a novelty to report on a major UK issuer investing time and energy in a loyalty initiative.

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