Premiering a new rebate idea.

You know the plot. Card issuers extend rebate incentives, based on various criteria, to qualifying end-user organizations and the payout is set to occur on some type of schedule. I have written about the pros and cons of rebates before, but this time I offer a twist on the script of how issuers offer these incentives. An article in The New York Times this month, outlined below, provided the inspiration.

There is nothing wrong per se with the current rebate process. Yet, too many organizations do not fully take advantage of Commercial Cards today, even though doing so can result in numerous benefits, including the added bonus of rebates. In the past, I explored how risk psychology contributes to Commercial Card aversions, so maybe rebate psychology is an answer.   

Psychology at Work

The article, Paying Employees to Lose Weight, described research on the success (or failure) of monetary incentives for getting employees to be healthier. Many things do not work well, such as delaying financial rewards too far into the future. I wonder if Commercial Card programs eligible for quarterly rebates excel more than those that are on an annual schedule. The real story, however, is what does work with such plans.

In one study, employees were in a group setting and only the group members who met monthly goals received rewards. The others missed out due to their own inaction, but they saw the success of their peers.

In a different study, each employee was set up with money in an account, which would be subject to daily deductions if the employee did not meet the designated goal (in this case, walking a certain number of steps each day). This trumped a separate group who could earn the same amount of money for meeting the daily goal. Losing money proved to be a bigger motivator than earning money.

Incentives that push under-performing card programs in the right direction are worthy of red carpet treatment.

Incentives that push under-performing card programs in the right direction are worthy of red carpet treatment.

Article referenced: Paying Employees to Lose Weight by Mitesh S. Patel, David A. Asch and Kevin G. Volpp

Applying the Lessons to Rebates

Imagine an issuer establishing a rebate dollar amount for an end-user client at the beginning of the rebate period. It would be based on the:

  • criteria of the issuer’s rebate incentives plan to which the client previously agreed
  • client’s Commercial Card goals and identified opportunity

To keep things simple from an accounting perspective, the issuer would not actually deposit the target rebate amount in an account for the client, but they would provide related reporting. Let’s assume an annual rebate schedule. After each cycle ends and the client has paid the balance, the issuer’s report to the client would show:

  • a “deposit,” increasing the amount in the account if the program was on track to surpass the original rebate target or
  • a “withdrawal,” reducing the account balance if the program fell short

Consistently low-performing programs would see the target rebate dwindling. Others might see a mix of deposits and withdrawals. Only the highest performing programs would see regular deposits.

The issuer could pair the above with additional reporting to the client that shows unidentified similar clients and their monthly status (advancement or decline).  

This is my notion of a workplace psychological thriller. While it would not capture the attention of the movie industry, it could help push under-performing card programs in the right direction. 


It is certainly possible that someone else in the industry has voiced (or even implemented) similar ideas of which I am unaware, so I encourage blog readers to comment below. I’m interested in what Frank Martien of First Annapolis Consulting has to say on the topic of Commercial Card rebates, as he has covered it regularly over the years. I respect his work and plan to attend his related session at the NAPCP conference next month.

For more on rebates, visit the related webpage.


About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more

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