Douglas Blakey speaks with Jamie Samaha Senior Vice-President, Data & Services at Mastercard about the successful launch of Pay with Rewards. As Samaha explains, the aim is simple: to ensure long-term customer loyalty with a seamless roll-out of reward offerings

Mastercard’s Pay with Rewards are live and kick off with big ambitions. Rarely has there been a marketing launch that manages to utilise just about every buzzword going.

Pay with Rewards is described as the next generation of card rewards. Specifically, the Pay with Rewards programme is designed for today’s digitally-savvy consumers. Moreover, Pay with Rewards offer cardholders flexibility when it comes to redemption. In particular, points can be redeemed at any of the millions of locations Mastercard is accepted in seconds.

That is all a good start and potentially a marketers dream. In addition, cardholders have the flexibility to redeem when they want, before, during or after a purchase.

Pay with Rewards: one of the most significant new marketing programmes 

Accordingly, cardholders have control over how, when and where they spend their rewards. And the digital angle means cardholders can redeem points in a single step using the Pay with Rewards app.

If all goes to plan, Pay with Rewards may represent one of the most important card marketing programmes of recent years.

Samaha leads Mastercard’s global product division, Loyalty Services. He is responsible for serving 1000+ Issuing customers across 60+ markets. And he has as at his disposal a range of card solutions and services, leveraging digital, data and talent.

His group is responsible for value-added services to drive preference. That includes digital enablement and customer experience as well as rewards, offers, card benefits, insurance, assistance and service deliver.

He acknowledges that rewards programmes can help to acquire new cardholders but winning lasting loyalty is the tricky part.

He tells CI: “cardholders frequently cite rewards as an important factor when choosing a credit card. But many never redeem them. That means for whatever reason, customers aren’t always getting what they want out of a rewards programme.”

And so before Pay with Rewards launched, Mastercard needed to understand the discrepancy between what they think consumers want, and what they actually utilise. That gap could be the difference between simply attracting customers and actually retaining them.


Mastercard Pay with Rewards: issuer benefits

Issuers must also see the benefit of the programme via significant increases in both cardholder engagement and spend. Says Samaha: “Pay with Rewards helps issuers manage the costs associated with rewards and fulfilment. Configurable programme rules direct cardholder behaviour in ways that optimise their card portfolio and reward programme performance

 “By giving people more ways to pay benefits all players, including merchants. For merchants, there is nothing that they need to do. The transactions are performed as normal from their standpoint and there is no integration or training needed. Our network does the work.

“We have created an entirely customised, flexible and global programme for cardholders where they have total control over their rewards. Mastercard enables cardholders to redeem their rewards (including miles and points) whenever, wherever, they want. That includes online, offline, or when travelling.”

In brief, for merchants that means no merchant integration or changes at the point of sale. Merchants simply see the transaction as they would normally, not that it was paid for with rewards.

Cardholders set up their account through an eligible issuer’s loyalty programme, via the website or app to see available rewards.

From there, the solution lets the cardholder determine how and when they will redeem rewards to cover purchases.

Mastercard Pay with Rewards: why digital

Digital delivery means simplifying processes, lowering redemption hurdles and removes friction from customer interactions. Adds Samaha: “consumers have become accustomed to digital self-service through their experiences with mobile apps and online retailing.

“For a loyalty program, offering the ability to accrue, track and redeem points, cash back or miles in real time is no longer a distinction. It is an expectation.”

Prior to the launch of Pay with Rewards, a Mastercard cardholder survey found that 69% of respondents said they would likely redeem rewards at the moment of purchase if the option were available.

As Samaha says, because digital interactions are fast and easy, they drive more frequent redemption. In addition, it encourages customers to keep reaching for the card that gives most value.

Experiences versus things

Moreover, there is compelling evidence that cardholder behaviour is evolving and at speed. Specifically, there is a trend away from redeeming points from catalogue items.

Says Samaha: “Increasingly, our research shows that people value experience more than things.”

As a result of the change in consumer behaviour, he adds that loyalty programmes today need to be more than just points and miles.

This is backed up by a report, released on 16 October by Mastercard and the Harvard Business Review entitled ‘Beyond Rewards: Raising the Bar on Customer Loyalty’. Samaha says that the report confirms that exceptional customer service, digital access and ease of use have displaced economic traditional points and rewards as the most important components for building loyalty.

As recently as five years ago, reward values were the principle factor in determining the success of a loyalty strategy.

Today, Samaha says that only 42% of those surveyed report that reward values is the top driver for success. In fact, executives surveyed for the report only rank traditional rewards as the fourth most important driver for success.

Exceptional customer service (51%), digital and omnichannel access (48%), and ease of use (45%) rank as the three key factors.

Moreover, these executives believe that five years from now digital and omnichannel access will be the most important factor in loyalty programme success (53%). By contrast, economic rewards will rank a distant eighth, tied with “building a community among members.”

Companies are increasingly moving to seamless, digital experiences and creating personal connections that last far longer than a points bank.

In fact, 55% of respondents say they’ve updated or refreshed their loyalty strategy within the past two years. That includes 30% who did so in the past year.

Samaha summarises the report simply. “Companies recognise that emotional connections with customers are important because selling isn’t just about logic. It is easier to establish connections with personalised communications rather than mass-audience messages.”

HSBC goes live with Mastercard Pay with Rewards

In the UK, HSBC is the first bank to go live with Pay with Rewards for its HSBC Rewards card. Pay with Rewards is a perfect fit for the bank’s loyalty strategy, built around customer engagement with the focus on the customer journey.

Moreover the loyalty programme complements the bank’s investment in improving its data intelligence capabilities.

Not to mention the bank’s drive to make sure that its customers feel rewarded for doing business with the bank.

While it is early days following the HSBC Rewards card launch all indications suggest a positive launch of Pay with Rewards. That means positive customer feedback and increased spend from more active and engaged customers as well as an increase in card activation rates.

Mastercard Pay with Rewards Key Facts

  • Pay with Rewards gives cardholders the flexibility to redeem their points for everyday spend as well as unexpected purchases – online, offline, or when they travel;
  • Pay with Rewards gives cardholders the power to pay with their points at over 43 million eligible Mastercard locations worldwide;

Pay with Rewards lets cardholders:

  • Track their rewards online or via mobile app and set personalised redemption preferences;
  • Control how and when their rewards are used and on what items no matter where they are in the world;
  • Redeem rewards in a single step, in real time by paying with Mastercard.