Since their debut in the early 1990s, debit cards have taken off as popular incentive rewards.

“Everybody uses them,” says Jesse Rodriguez, an incentive program specialist with Card Express Inc., Irvine, Calif. “I've dealt with companies like Xerox all the way down to the little office across the street that I didn't even know existed.”

Are “stored-value cards,” as they're known in the industry, the way to go for you? Read on to find out.


First, it's best to get a handle on what kind of card you want to use. In general terms, stored-value cards boil down to two types: nonreloadable, or prepaid, and reloadable. Nonreloadable means that dollars cannot be added to the card. Reloadable is just as the name implies: Points, or dollars, can be added to the card at any time.

“Gift cards are loaded one time and used one time, or up to the value placed on the card, and are usually good at certain merchants only, like Blockbuster or Starbucks,” explains Jerry Uffner, president of Incentive Solutions Inc., Atlanta.

Cards used in incentive programs are typically reloadable.

Gift cards are available from a variety of merchants, from retailers to banks to incentive companies. It's a matter of deciding which is best for you.

Bells & Whistles

Once you've decided whether you want a reloadable or nonreloadable card, things get a little more complicated. Why? Because the types of cards and the bells and whistles that come with them seem to grow exponentially. “There's a whole mess of cards out there,” is how Uffner puts it.

To choose the right card, you have to ask yourself what you're trying to accomplish. Do you want to recognize an employee or group of employees? Or are you looking for an incentive program in which you can regularly award your top performers? How much freedom do you want to give your top performers? Will the card be a promotional item? How do you want to work marketing into the mix?

The Lowdown on Gift Cards

If you're going the recognition route, you'll want to look into the gift card, or nonreloadable, option. Gift cards have seen their popularity rise in recent years, almost completely replacing gift certificates.

“They're more durable and easier to track,” says Kathy Patton, assistant vice president and business manager of FirstMerit Bank's bank card department in Akron, Ohio.

“Gift certificates can be easily forged and counterfieted. And occassionally a cashier will mistakenly hand back the gift certificate to the customer.” This allows the customer to use the gift certificate again. With gift card technology, as soon as the customer uses the card, the cost of the purchase is deducted from the card's limit.

Nearly half of Americans have used a gift card, according to FirstMerit Bank, and they spend nearly $200 with them on average. Most will return to the retailer to use up the value on the card, and more than half will spend more than the value of the card. The card itself costs nothing to purchase.

The variety of gift cards is far and wide, but they basically come in two categories. Those that carry a major credit card brand, such as Visa or MasterCard, and those that are merchant-specific, such as Macy's.

Major credit card — branded gift cards allow recipients to use the card at any merchant that accepts that credit card brand. “Some companies contract with retailers so that reward recipients can only make purchases through those companies,” says Rodriguez. This option can be a little less expensive, but it also comes with less flexibility.

Companies can also specify how a gift card can be used. For example, a company can decide that it only wants its reward recipients to use the card in restaurants. Technology is such that when a card is swiped at a restaurant, the purchase request is directed to a database at the incentive company, which can then tell whether the user is making a purchase at a designated restaurant. If the point of purchase is not a restaurant, in this case, the purchase is denied. Companies can also decide whether to include an automated teller machine feature with the card. This feature allows the reward recipient to use an ATM to take out cash rather than make a purchase.

Finally, an important feature for a promotional reward: Prepaid cards can be embossed with a company logo or slogan.

Web-Based Incentives

If you're creating an incentive program that will reward top performers on a regular basis — weekly or monthly — the reloadable stored-value card is for you. Today, stored-value card-based incentive programs come with comprehensive management tools that let employers track the program's performance.

“One of the catalysts that created the card movement was that people wanted to be paid quicker and they wanted to chose what they could buy,” says Uffner.

Gone are the days when top performers would receive a catalog in the mail, make a selection, and receive their rewards several months later. Web-based programs can track sales in real-time and reward performers in real-time. Points earned one day can be loaded on the performer's card by the next — or sometimes the same — day.

Also, with many Web-based award programs, participants can view up-to-date account balance information, join a marketplace where they can earn money when they shop online, send money to anyone enrolled in the program (as a gift, for example), and more.

Web incentive programs can sometimes keep better up-to-date sales reports than companies can. And if a company decides to create an incentive program to push a low-selling product or to launch a new product, the Web can bring that program to the forefront of the sales force overnight.

“It's amazing what we can do on the fly,” says Uffner.

Just Remember This

Uffner's s advice to a meeting professional considering a stored-value card program — especially an ongoing incentive program — is to really investigate the company that you're choosing to make sure that it will be around when you need it. Make sure the company understands the card industry and what it is you are trying to accomplish in your industry.

“You should really focus on what you're trying to achieve, and the card company should, too,” he says, “because there are so many types of cards and ways to use them.”

Debit Card Buzzwords

No cardholder name: Ideal when a reward must be immediate, as there is no time delay for imprinting names. Also suitable when the recipients are not predetermined.

Cardholder name: By adding this personal touch, name-embossed cards provide a degree of participant identification in the incentive program.

ATM access: While the goal of most incentive programs is to provide recipients with something of value or a treasured memory, providing the flexibility of turning the reward into cash may be desirable. Access to automatic teller machines increases recipients' options, yet can reduce the repeat value and brand retention of debit-only cards.

Custom, generic, and co-branded debit cards: Generic cards carry only the logo of the issuing bank and can reduce the cost of internal programs. Custom cards guarantee that your brand message gets to your target each time they open their wallets. They are imprinted with both your logo and the issuers' to increase your brand recognition. Co-branded cards, when two or more companies go in together on a promotion, do not carry the brand power of customized cards, but production costs are lower because the costs are shared.

Breakage or unused funding: Some card companies return unused balance on the cards after the program has ended. These funds average 8 percent to 13 percent.

Setup fee: Some banks charge to set up a unique Program ID for each card program. This is typically a one-time fee, so if a program is extended or reactivated at a future time, the branch is already established.

Funding fees: There is a small fee to fund the cards, and it is charged each time money is loaded onto a card.

Source: Incentive Solutions Inc./AchievaCard