What the Rogers credit card means for consumers

Rogers Communications will soon offer credit card services -- more specifically, a rewards loyalty program. With any new credit card come uncertainties, and consumers who want to know: Is it worth it? While the true verdict won't be in until the card launches, experts think it could be a positive development for Rogers customers.

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According to spokesperson Allison Fitton, Rogers will first test its new credit product in a pilot program targeting select groups of the corporation's employees as well as customers.

While he would not comment on the exact reward structure the card will offer, Fitton says, "Customers participating in the Rogers First Rewards program with a Rogers-issued credit card will have the opportunity to earn points at a materially accelerated rate."

Customers in Red Deer, Alberta and London, Ontario were the first to see the Rogers First Rewards program. Rogers service subscribers are automatically enrolled in the loyalty program and earn points when they buy eligible Rogers offerings. Point collectors can then redeem for upgraded Internet packages, premium TV content, home phone long-distance calls and wireless rewards.

Closer to the nationwide kickoff, the telecom giant will clarify details such as whether cardholders can use their niche credit card to make preauthorized payments for Rogers products and services and, in the process, still earn extra First Rewards points.

"At the time of commercial launch in 2014, our credit card business will link to our mobile payments business," adds Fitton. "We expect the Rogers credit card to be one of many payment cards our customers will be able to download and store on their smartphone."

Fitton also confirms that the new Rogers card will have Near Field Communication (NFC) "tap-and-go" payment functionality.

What do experts think?
The Rogers credit card and First Rewards loyalty program present a novel combination among telecom services. But will consumers necessarily benefit from these innovations?

We asked two experts from distinct disciplines to help evaluate the pros and cons of the new Rogers rewards credit card from the consumer mindset. Lynda Lovett is a principal at financial services research firm MarketSense Inc., and investment strategist Elvis Picardo is a vice president of research and portfolio manager for Global Securities Corporation in Vancouver.

Q. Do you see any risk that the new Rogers credit card and associated loyalty program will result in higher consumer charges for telecom products and services?

Lynda Lovett: I see this as a great retention strategy, as the rewards points earned can offset the price of existing services or be used for products and services that Rogers customers may not have considered before. Rogers has found a way to differentiate itself from the heated competition in this market. Rewards such as smartphone upgrades, movies, long distance and travel packs are desirable to many Rogers customers who will likely appreciate the savings they can realize by using their rewards points.

Canadian cardholders are quite savvy when it comes to rewards programs and will do the math to determine if the rewards they are earning are actually worth the number of points required for redemptions. A challenge for Rogers will be how to make this card the primary card in consumers' wallets -- the one on which cardholders spend the most each month.

While there are opportunities for Rogers to help customers have a better and more integrated experience, Rogers will likely still have to be competitive on price. This rewards program can be a differentiator for Rogers and a way for customers to offset any increased costs.

Elvis Picardo: No, I do not see a risk that the new Rogers credit card would result in higher consumer charges for telecom products and services because of its "First Rewards" loyalty rewards program.

Loyalty rewards programs are designed to reward customers for their loyalty to a particular merchant or service provider. There is little evidence to suggest that such programs push up prices for other consumers.

Q. Do you believe that the new Rogers credit card will speed up the consumer move to mobile wallets -- or is this just another retailer credit card?

Lovett: With its advantages in terms of innovation, the Rogers Bank product may help move mobile payment adoption along more quickly‎.

In our syndicated CardSense study conducted a year ago, we found that 27 per cent of credit card holders were interested in using their smartphones to make mobile payments. We expect this number to increase in our next wave of research, which we are conducting in October. As cardholders become more comfortable with the technology, more consumers will adopt mobile wallets.

We do know from our research that a small percentage of the population "would switch to another credit card issuer that offered mobile payment capabilities if their credit card issuer did not [offer mobile payments]." So there is opportunity to attract a small proportion of these early adopters to the Rogers mobile wallet.

Q. Do you anticipate that there will be competitive pressure for Canada's other two wireless giants Bell and Telus to introduce their own loyalty credit cards?

Lovett: Gaining approval to launch a credit card in the Canadian marketplace is not a simple process, but I am sure Bell and Telus are watching if not already reacting to the Rogers' launch. They're likely contemplating their own strategies to remain competitive. Rewards programs are a key factor in loyalty and I anticipate seeing both of these Telcos making a move to strengthen the loyalty of their customers in some manner.

Picardo: That could be a possibility. Given how closely the "Big Three" compete in the Canadian wireless space, anything that is perceived as conferring a competitive advantage is not likely to remain so for long.

However, even if all "Big Three" telecom providers issued their own credit cards, this would likely have little impact on the Canadian telecommunication industry from the consumer perspective.

What Canadian consumers would like to see are lower wireless rates. There was some hope that Verizon's potential entry could lead to lower rates, but with Verizon clarifying that it has no interest in entering Canada, consumers here may have to wait a little longer.

See related: Why digital payments won't replace credit cards; Are mobile payments safe for consumers?

Published October 1, 2013

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