At Infosys Cards and Payments, we help our clients harness the power of technology-led innovation across the entire payments ecosystem encompassing payment networks, merchant services, stored value, FI payment services, and payment aggregators. Our thought leadership and a design thinking approach helps us co-create solutions with our clients to address their business problems.

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June 1, 2016

Redefining loyalty points to save, not spend

 After a year of employment, I became an excited owner of my first credit card. The fact that it did not mandate instant re-payment, and instead provided the flexibility to re-pay after a certain duration depending upon the billing cycle and grace period, took-on a new approach to my purchasing approach! What intrigued me most was the concept of loyalty points, also referred to commonly as reward points, which the card company provided to all its card members for making purchases. And it worked quite well to encourage customer loyalty towards the card brand.

I was no exception to this marketing strategy and started using my credit card judiciously to manage my financial expenses as well as accumulate loyalty points. Over the years, I accumulated a substantial amount of loyalty points which were redeemed to get gifts, gift vouchers, air miles, etc. In the interim, I even accelerated this accumulation of points by using the card during certain promotional campaigns.

At the same time, I ensured that I diligently paid outstanding amounts well within the due date. Constant reminders from anxious parents about my credit card indulgence (instead of hard cash) helped, indirectly, in ensuring that I paid on time. Their mind was clouded with the constant fear that companies charged high interest fees for late payments or included ambiguous applicable charges. However, I kept assuring them that my experience with credit card companies was good and there was nothing to fear.

Alas, as it happens with most, long-time, card users there comes a time when you honestly forget to pay the outstanding amount within the due date. It happened to me too and late payment charges were applied for my forgetfulness. I negotiated with the credit card company requesting them to revert late charges as it was my first oversight and requested them to re-consider my excellent track record in payments. However, I failed to persuade them to revert the late payment charge and was compelled to pay up.

  Looking back at that experience, I strongly recommend that credit card companies should extend a helping hand to card holders in such situations. They should enable automated redemption of loyalty points when customers delay payments of outstanding amounts; provided sufficient loyalty points are available. As a prerequisite, customers should authorize this transfer by signing a consent form beforehand.

The bottom-line is that such auto redemption features should be used once every six months only, so that card companies do not lose additional finance in the form of late charges for repetitive defaulters. What this will do is that it will save customers from having a bad credit history in case they forget to pay the amount by the due date. It will also improve customer confidence in credit card products.

It goes without saying that card companies must inspect the various regulations before implementing this feature and then proceed to appropriately design it. What's more, the current dynamics of the marketplace entails that companies could differentiate themselves from the ever increasing competition with such a feature.

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