Editorial Policy

MasterCard Introduces New Pay with Rewards Program

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By Eva Norlyk Smith, Ph.D.
May 6, 2010

Each year, a surprising number of rewards credit cardholders let earnings expire without ever cashing them in. In part, it’s simply forgetfulness, in part it’s because it can be a hassle to sort through complicated rewards redemption rules and go through all the steps to claim earnings.

What if cashing in rewards credit card points were just as easy as earning them, i.e. while making a purchase? Well, this benefit will soon be available to many MasterCard credit cardholders, thanks to a newly introduced MasterCard service, the Pay with Rewards program.

The Pay with Rewards program enables merchants, or groups of collaborating merchants, enrolled in the program to offer rewards redemption at the point of sale for loyalty cardholders. Under the program, merchants will provide customers holding their store-branded MasterCard rewards credit card with a separate rewards “redemption” card, which customers can swipe at the merchants’ stores to pay for purchases with rewards earnings. All rewards earnings and redemptions will be tracked by MasterCard’s back office system using the Pay with Rewards service.

The Pay with Rewards program is just one of a series of new upgrades MasterCard Inc. recently announced to its payment processing network. With competition ever-heated between credit card giants Visa, Inc. and MasterCard, Inc., both companies are constantly looking for ways to get a technological edge in order to attract more business.

In addition to the Pay with Rewards program, MasterCard announced that it had scaled up its fraud protection system, offering cardholders real-time threat evaluation at the point of sale to protect against compromising account activity. MasterCard also reduced the hold-time placed on gas pump transactions, in which part of the credit line (or checking account funds for debit card transactions) is temporarily locked, so that the card issuer is assured of payment. The new MasterCard upgrade drops the hold-time on funds to less than two hours.

MasterCard is the second-largest credit card company in the world, after Visa credit cards. Like Visa, MasterCard is a global payment processing network; MasterCard credit cards are accepted in more than 210 countries. MasterCard Worldwide does not issue credit cards itself, but rather licenses the MasterCard brand to banks and other financial institutions, and then processes transactions made with bank-issued credit cards.

MasterCard credit cards are licensed to more than 25,000 financial institutions all over the world, which are part of the global MasterCard network. Rewards credit card earnings, credit card APRs, annual fees and other credit card terms are set by each individual bank or financial institution issuing the MasterCard credit cards, giving consumers a wide range of choices when it comes to selecting MasterCard-branded credit cards.