Megas Ink Debit Card Pact
<B> Megas Ink Debit Card Pact</B>
<I>Agents Marry Maritz Incentive Program With Amex Card</I>
By Lauren Bielski
Seeking to market a pre-paid debit card with universal reach, mega agencies American Express and Maritz Performance Group have announced a new joint venture, American Express Incentive Solutions, L.L.C.
The two megas eventually will replace Maritz's restricted private label Mastercard, which can be redeemed at only designated retailers, with an Amex debit card that will be accepted almost anywhere--building on the philosophy previously adopted by Amex and in practice with a few small incentive houses.
Following the lead of the retail industry, where personal cards are beginning to replace paper gift certificates, the joint venture intends to capitalize on what it views as a tremendous directional shift in how incentive merchandise is handled.
Significant if only for the marriage of number one ranked American Express and number five ranked Maritz to expand the market for the debit card concept, the venture also distinguishes itself by promising to bring together the technological savvy and incentive market know-how of the mega agencies, which likely will spur global acceptence of an already popular reward option.
"In the past, American Express and Maritz each approached the market independently with individual expertise in this area," said Steve Maritz, chief operating officer of Maritz.
"We each recognize the enormous opportunity in this $24 billion incentive industry," Maritz said. "Through the joint venture we can take full advantage of the growing interest in new and customized approaches to employee motivation."
Darryl Hutson, who has served as corporate vice president, director of marketing for Maritz Performance Improvement, has been named the chief executive officer of the new company, which is in the formative stages of operation in the first quarter.
Hutson said once staffing decisions had been finalized and the company is fully operational, it will put together a set of strategies designed to set the pace for an industry keen on customizing the incentive experience.
A spokesperson for American Express said that the debit card concept acknowledges a forever changed incentive industry in which one size definitely doesn't fit all.
American Express Incentive Solutions L.L.C. will build on the strength of the imbedded chip technology developed independently by both agencies. Amex has a state of the art processing system designed to support stored value cards, further the joint venture will be able to use Maritz' recently patented technology to support select merchant acceptance.
Initially, AEIS will sell Exclusively Yours and Your Choice, first launched by Maritz in 1995, as well as Incentive Fund Card and American Express Gift cheques. Later the new organization will roll out a wider range of reward options, giving clients nearly universal merchant acceptance.
The new company targets incentive program participants from its vast collective account base, to support employee, dealer and customer programs.
How have prepaid debit cards done so far?
"I think the debit card concept has taken off faster than many incentive houses thought it would as a direct competitor to merchandise," said Bob Vitagliano, president of the Society of Incentive and Travel Executives. "Perhaps everybody thought it was going to be a flash in the pan--but it has become a proven option, I know of a few houses that have begun using it."
Vitagliano said that cards were being used three ways. First, as a second or third place prize option in a multitiered program, secondly as a combination reward with travel, and finally on its own, all but replacing for some incentive houses the traditional certificate or catalogued merchandise approach.
But not everyone is a fan of the concept. Jim Dittman, president of Dittman Incentive Marketing in Edison, N.J., said that the net effect of pre-paid debit cards is a further--and potentially ruinous--commodification of the incentive industry.
Still, Dittman did issue his own private-label card in response to market pressures. "Exclusively Yours did well for the first year or so of its life, until some of us caught on," he said. "Now I have a card that we offer in our mix of merchandise and travel incentive options."
Dittman said that his card, which is universally accepted, has done well, considering his significant competition. "The Golden Rule for the 21st century is still the man with the Gold makes the rules, and the 'gold' these days is information," he said. "I see these mega agencies leveraging their valuable store house of data to offer more information management services for companies that adopt the card."
Bill Meade, senior vice president of American Express said that combining the brand strength of Amex cards with the incentive experience and connections of Maritz should grow the burgeoning stored value market.
Pre-paid cards were poised to be a revolutionary concept when rolled out two years ago, eliminating needless paper as well as processing manpower, and reducing the time of award and redemption process from a couple of weeks to a couple of days.
The Exclusively Yours card, when issued in 1995 to about 20 companies purchasing 38,000 cards, set out to trailblaze the personalized incentive industry by giving winners access to a wide array of retailers including T.J. Max, Eddy Bauer and Speigel stores and travel suppliers selected by Maritz, including airlines, upscale hotels and cruise lines.