A frequent request at PFI is for facts and information about selling against a debit card. The following is the most current information we could compile (with help from our marketing partners) that presents compelling arguments against debit cards and specifically in favor of merchandise incentives.

A Debit Card Program Is A Cash Program

• Actually, a debit card program is an addition to compensation. What a debit card program IS NOT is an awards program. The reason is that people spend their additional debit card cash, much like they do regular compensation. As such, the extra benefits get lost in the participants’ disposable income, and they are less likely able to clearly identify the awards fully earned from the incentive program from those purchased from their normal income.

What About Filtered Cards?

• Some "filtered" debit cards tout that cash transactions at ATM’s can be blocked. However, most debit participants soon learn that they can go to a bank’s teller window and directly withdraw cash, or purchase/return merchandise and receive cash instead of a debit card balance credit. Thus, the promised trophy value is easily defeated.

• Other "filtered" debit cards tout either a short list of retailers, or a very long list in the form of a booklet. ("I forget, is it L.L. Bean or is it Land’s End or Eddie Bauer that I can redeem awards?) The limited approach is just that, too limited. While the expanded 200+ retailer approach is too confusing, many times leading to embarrassing declines when the debit card databases aren’t updated with new retail locations. The additional complications over which retailers limit purchases only to in-store vs. those that only honor the card only through a direct-mail catalog leads to participant frustration, and ultimately unhappy participants.

A Debit Card Earned Is NOT A Debit Card Shared

• Debit Card program benefits are less likely to be shared with family members, because usually only one card per participant is distributed, and statements are many times mailed to the workplace rather than the home.

• Award dollars deposited to debit card present the participant with the opportunity to spend their earnings on purchases with little to no trophy value such as gas and groceries or used to pay bills. There is no comparison to the motivational and shared value award dollars used for these expenditures versus award points used to buy big screen TVs, stereo systems or a new furniture. The fact is, winners don’t brag about and share debit card earnings like they do a new CD player or set of golf clubs

The Motivational Value and Convenience is in The Merch NOT the Plastic.

• You can’t beat the convenience of a merchandise award program where you can shop for thousands of awards with proven motivational appeal from the comfort of home 24/7.

• Merchandise catalogs provide hundreds of proven motivational awards that satisfy participant wants, not needs. Participants don’t call them wish books for nothing!

• Debit cards by nature have a limited amount to spend. Imagine a participant using their debit card for a nice evening out and when they go to pay the bill they are $1.00 over the limit, their card is rejected and they need to offer another form of payment-not very memorable or rewarding.

Take A Closer Look At The Cost Of A Debit Card

• Like cash programs, it’s difficult to move away from a debit card once you’ve introduced them. When you discontinue a debit card, it is perceived as a compensation benefit reduction rather than the end of an incentive program. This becomes even more difficult if there is a union environment. Conversely, ending a merchandise awards program provides continued participant goodwill and improved behaviors long after the program earnings period deadline. Award redemptions continue for months after the program end, and the rewards for the home and family act as lasting reminders of a job well-done for many years to come.

• You must pay 100% of the tax on dollars awarded via a debit card vs. only 70-80% of the merchandise award value (as low as 60-80% when you exclude freight and state sales taxes).

• Debit card programs have substantial setup and maintenance costs. As a rule of thumb, Average earnings should exceed $250 per participant per year in order to justify the startup and maintenance costs.

• Debit Cards present as greater opportunity for fraud and misuse. Debit card holders can often charge more than the amount deposited at vendors that can’t or fail to get on-line authorization. These off-line transactions many times turn the program sponsor into a credit collector, which rarely results in a positive outcome and continued goodwill.

Current Research Reinforces the Value of Merchandise

• A sponsor can obtain as much motivation and improved performance from $600 in merchandise incentive awards, as they can from $1,000 in debit card/cash awards. According to recent studies of three major incentive programs, where homogeneous groups were offered either cash vs. trophy valued awards results were analyzed; Merchandise Groups averaged outperforming their Cash Group counterparts by 70%-80%.

• Many debit card users are now beginning to recognize the limitations of debit card programs first introduced in the 1980’s. In fact, their popularity peaked in 1997 as fewer companies are continuing their use debit card vehicles, according to the latest research. In independent surveys of over 4,000 U.S. businesses in 1997- 2000; 45% of respondents who had operated a debit card program previously, said they would discontinue their use for many of the reasons cited herein.

• Study of 6,500 Likely Incentive Users, Ralph Head & Assoc. LTD.

• A major restaurant chain has offered its Managers substantial cash and merchandise awards (equal amounts from $600-$3,500 each annually) since 1990 for attaining chain goals, with tremendous results. However, the Managers when surveyed over which of the two award components they would least like to see go away, overwhelmingly voted for the merchandise award component over the cash awards. A clear majority also wanted cash component to continue vs. a new debit card replacement.
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