By Chris Jones
VP, Digital Services and Incentives at Blackhawk Network Canada
More flexible and efficient than checks and other outdated reward options, prepaid cards offer cost savings, reach a broad audience and offer unmatched versatility
Many Canadian businesses issue incentives via checks or other outdated methods. But doing so can be expensive, cumbersome and ineffective. Peoples’ payment preferences, spending habits and lifestyles are evolving rapidly, and old school rewards are being left behind as viable incentive options. Now is the time for organizations to modernize incentive and reward programs to offer Canadians more flexibility, convenience and satisfaction—while driving cost savings and desired behaviours.
Although they have been around for years, prepaid cards emerged as go-to payment resources for millions during the pandemic, and their popularity will continue to soar. According to research from the Canadian Prepaid Providers Organization (CPPO)1, COVID-19 drove Canadians to use payment cards more and cash and checks less. Prepaid cards provide recipients with flexibility and fraud and loss protections, and can be redeemed where major processing networks are accepted.
According to Jennifer Tramontana 2, co-founder and executive director of the CPPO, “Prepaid card adoption has skyrocketed across Canada in the last couple of years. This widespread adoption has been driven by Canadians’ desire for safe, versatile, accessible and convenient payment tools. Prepaid cards are now table stakes for organizations issuing rewards and incentives.”
There are many use cases for prepaid cards. For example:
- People appreciate prepaid cards as rewards from their employers. Blackhawk Network3 discovered that when asked about their workplace reward preferences, 78% of survey respondents from several countries, including Canada, cited prepaid rewards as their number one choice regardless of the occasion, role within the company or industry. Prepaid beat out all other kinds of reward options typically offered.
- Retailers can use prepaid cards as promotional tools. Research4 found that 76% of Canadian respondents who received a prepaid card from a retailer as part of a promotion would want to shop with that brand more often, and 75% said they would spend more. Three quarters of Canadians surveyed would also feel increased loyalty and more valued as customers by retailers that gave them prepaid rewards.
- Channel managers looking to boost engagement and mindshare with their indirect sales partners can offer prepaid rewards for supporting their brand(s). Resellers, distributors and other channel partners are, at the end of the day, consumers that will appreciate the flexibility prepaid cards provide.
Organizations looking to drive operational efficiencies and satisfy Canadians’ payment preferences can (and should) lean on prepaid cards because:
- Prepaid cards can come in physical or digital form—and are fast. The top reasons respondents haven’t received the vaccine or are hesitant to do so are: because the vaccine is not yet fully FDA-approved, they are fearful of the side effects, they’re waiting to see how other people react to the vaccine, and they’re not sure whether the vaccine is necessary.
- Prepaid and retail gift cards enable multi-channel spending. Physical and digital cards can be spent in stores, online, via mobile devices and even via retailers’ apps. This allows for safer, simpler, more seamless shopping experiences. Most other reward options provide more limited—if any—spending options that don’t empower people with easy access to the multitude of choices that fit their spending habits.
- Canadian employees love (and are motivated by) prepaid. Research3 has found that about half of Canadians want to receive prepaid and gift card incentives and rewards from their employers. Survey respondents reported that if their employer gave them a prepaid or gift card as a reward, 76% would feel motivated to work harder, 78% would feel more loyal toward their employer, 84% would feel valued and 76% would want to stay with the company.
- The right rewards can drive future sales. When people receive prepaid rewards, they are more likely to use them and remain connected to the company that issued them3. This keeps brands top of mind and opens the door for regular customer touchpoint opportunities that can drive engagement and provide valuable customer insights. The more engaged customers are with a brand, the more open they are to cross- and up-sell opportunities.
- People prefer modern payment and reward options. Gone are the days when people should be rewarded with company merchandise or checks. Research5 from the CPPO found that the number of checks processed in recent years has declined steadily as the demand for prepaid cards has increased. The CPPO also found that more than 90% of Canadians are satisfied with current prepaid products offered to them.
- It’s expensive to issue other monetary incentives Research6 found that paper checks cost businesses as much as $3.15 per paper cheque issued in addition to the value of the cheque itself. These costs are incurred when businesses cut the checks, print them, mail them, follow up when they are not cashed or when checks are lost and must be re-issued. These incremental costs add up quickly and can even exceed the payment amount itself—costing a small fortune.
- Other monetary rewards are slower to deliver. In today’s fast-paced economy, checks have become archaic and cumbersome payment tools for issuers and those cashing them. Cheques take time to arrive by mail and then need to be cashed—creating extra steps before the funds can be used. On the other hand, prepaid cards can be spent almost immediately after they are received and also provide access to funds for all recipients whether or not they have a bank account.
- Cheques can be exclusionary. While the majority of Canadians have bank accounts, banking options aren’t necessarily always affordable. For those who are un- or under-banked, checks have to be cashed through financial services outside the banking system, which can come with a hefty fee that negates some of the value of the cheque. Prepaid cards empower people with full access to their funds without expensive fees.
- Prepaid cards are protected. Prepaid cards are issued with security features that protect and replace lost funds. In contrast, other monetary rewards like checks cannot be replaced once the value is stolen; according to the CPPO5, cheque fraud is the most common type of financial crime in Canada.
Prepaid cards help Canadian businesses streamline incentives programs to drive cost savings and deliver faster, safer and more powerful rewards to employees, channel partners and customers. People recognize the value prepaid cards bring to the table—not just monetarily—and now expect modern payment options from the organizations with which they interact. Moving to prepaid card rewards is a win-win for all.
This article was originally published in CPPO.
1 The Canadian Prepaid Ecosystem Report 2021, produced in collaboration with FinTech Growth Syndicate (FGS), is an analysis of 90 companies operating in the Canadian open-loop prepaid ecosystem to develop a deeper understanding of the innovative offerings, market forces and trends, as well as to build a heatmap of all players in the Canadian prepaid space.
2 Jennifer Tramontana is the co-founder and executive director of the Canadian Prepaid Providers Organization, and was quoted in September 2021.
3 The “Global Rewards Preference” study is an internet-based study conducted by Isometric Solutions on behalf of Blackhawk Network in March, 2021. The sample size included 600 Australian, Canadian, US and UK adults ages 24-65.
4 “BrandedPay: How People and Brands Connect Through Payments” is based on the findings of an internet-based survey conducted by Leger on behalf of Blackhawk Network between February 12 and March 17, 2020. The sample size included over 12,000 respondents in eight countries.
5 “Replacing Cheques with Open-Loop Prepaid Products” is a report published by the CPPO in June 2019.
6 2019 Study of Consumer Payments Preferences is an internet-based survey conducted independently by YouGov on behalf of Pathward in May 2019.The sample size included 1,214 U.S. adults ages 18+. The figures have been weighted and are representative of all U.S. adults (aged 18+).