White paper for community financial institution issuers reveals results of credit card rewards analysis

Payment processor teams up with data analytics firm to challenge long-held notions about the return on investment of credit card rewards

DES MOINES, IA (May 18, 2016) — Although the title of TMG’s latest white paper may warrant a spoiler alert, it sums up well the findings of the payment processor’s 12-month credit card rewards study. The paper, “Yes, Credit Card Rewards Really Are Worth It,” was penned by TMG’s Brian Day, director of digital strategy, in partnership with Karan Bhalla, managing director for data analytics firm and TMG strategic partner IQR Consulting.

The paper is the second in a series of white papers TMG is publishing on data-driven strategies for financial institutions and includes a foreword by TMG CEO Shazia Manus. “This paper, written for financial institution leaders confronting long-held notions about the value of card rewards, is a prime example of how data can dispel myths,” Manus writes. “I’m confident you will be inspired as you see how a simple review of cardholder behavior has the power to change minds and empower fresh ideas.”

Day and Bhalla, each in the business of helping community financial institutions better compete in today’s payments game, say rewards are table stakes. Yet, too many issuers hold back, discouraged by what Day and Bhalla call age-old misperceptions among rewards naysayers.

The notion that rewards are superfluous generally manifest in two positions: 1) rewards offer little return as compared to the expense; and 2) rewards are most beneficial when cardholders don’t redeem points.

Believing the opposite to be true, Day and Bhalla gathered their teams and set out to analyze the data generated by 12 months of activity from 400,000 credit card accounts issued by TMG clients. The paper includes detailed analyses of credit card rewards’ impact on profitability, cardholder loyalty and issuing financial institutions’ exposure to risk. Expert tips to help issuers turn good credit card programs into great ones are sprinkled throughout.

“One preconceived notion popular in the C-suite is true: Rewards programs require a significant investment. And most leaders in the community financial institution space are aware of that,” write the pair. “The return on that investment, however, can be huge. In fact, the TMG-IQR team’s analysis revealed rewards cards are 79 percent more profitable than their no-frills counterparts.”

Addressing the second commonly held misconception, Day and Bhalla write: “It’s easy to understand how finance professionals view rewards, and especially rewards redemption, as an expensive ‘payment’ to cardholders. Rarely are these individuals presented with the results of a rewards campaign at the same time as the bill from one. This can lead to the compromise of offering rewards while discouraging redemption. As it turns out, however, an unused or latent rewards program is the most expensive rewards program possible, simply because the issuer is not reaping the highest return on its investment.”

To read more about the study and its results, download the white paper, “Yes, Credit Card Rewards Really Are Worth It” at

About TMG

TMG is dedicated to creating customized, technology-driven card processing and payment solutions for credit unions and community-based financial institutions across North America. Innovations in fraud management, loyalty programs, alternative payment systems and analytic reporting, and the competitive advantages they create, have helped TMG forge a new standard in offering cutting-edge credit, debit, ATM, prepaid card products and a P2P payment solution. For more information, visit


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