This document discusses the use of prepaid cards for employee reward and recognition programs. It presents research showing that prepaid cards have become the preferred award over cash equivalents because employees view them as discretionary spending money. The document also analyzes spending data showing that employees use prepaid cards for a variety of purposes that fulfill different levels of needs according to Maslow's hierarchy. It concludes that prepaid cards provide the cash equivalency of rewards with the non-cash advantages of being memorable and associating the reward with the sponsoring company.

1. The science behind using
Incentive Prepaid Cards
for Employee Recognition
Accelerating Performance:

2. Objectives
• To present research on how prepaid cards have become the
award of choice for corporations for employee reward and
recognition programs.
• To understand why prepaid card rewards are more
preferred and more effective than equivalent cash rewards.
• To correlate prepaid card use and popularity with
motivational psychology.
• To share data on where open-loop prepaid card recipients
spend their reward dollars.
• To present prepaid card award best practices to maximize
effectiveness.
2

3. • Any non-cash reward given to an employee for recognition
of achievement.
• It does not include payroll, commissions, bonuses or any
other type of cash compensation.
• Does include travel, merchandise, recognition symbols
(pins, plaques) and gift cards.
Defining Employee Reward and Recognition Programs
3

4. Source: 2012 Research by First Data
Employee Non-Cash Awards by Percentage of Spend
4

5. 5
Why Prepaid Cards?

6. 6
Rated Most Effective

7. 7
Recipients' Favorite Non-Cash Award

8. • Most businesses (73%) use a single type of card, but some use multiple types. Of those
who use multiple types, the most common combination is open loop and closed loop.
• When firms are using multiple cards, they generally are splitting their budgets 50/50
between open and closed-loop cards.
8
Types of Prepaid Cards Used*

9. 9
Recipients Prefer Open Loop Cards
Recipient preference given a choice between
a $50 open loop card and $50 in cash

10. Even though open loop cards are near-cash equivalents,
recipients prefer the open loop card over cash nearly 5 to 1.
10
Better Than Cash!
Why: could be
explained in the
behavior and
psychology of
recipients

11. Possible reasons…
• Recipients classify cards as discretionary or “fun” spending vs. cash
they receive as rewards.
• Recipients more likely to add the value of award to monthly budget
vs. incorporating value, as with cash.
• Recipients make more memorable purchases with prepaid cards
than cash (Schweyer, 2012).
• Recipients associate the award with the corporate sponsor.
11
Why Better Than Cash?

12. Click to edit the outline
text format
− Second Outline
Level
Third Outline
Level
−Fourth Outline
Level
Fifth
Outline
Level12
Are Prepaid Cards Memorable to the Recipient?

13. 13
Motivational Award Theory

14. *Based on historical aggregate spend data of over 1 million open
loop cards given as corporate employee awards
60% of open loop card spend is for non-essential items
Maslow's Pyramid Core Values Employee Needs
Percentage of
Spend Merchant Category
Self Realization
(achieving full potential)
Self-Fulfillment Needs 38%
hobbies, books,
specialty clothes,
shoes, electronics
Personal Esteem
(prestige and feeling of
accomplishment)
Social Acceptance
(relationship and friends)
Psychological Needs 22%
restaurants, real
estate, drug stores,
pharmaciesSafety Needs
(security and safety)
Psychological Needs
(food, water, warmth)
Basic Needs 40% grocery, gas, fast food
14
Spend Pattern Data*

15. • Personalize the card with recipient’s name
• Print personal note on the card and on the carrier
(if applicable)
• Customize the card with corporation’s branding
and/or program’s branding
• Combine award issuance with recognition event
• Consider “gifting” packaging
15
Best Practices for Open Loop
Prepaid Card Awards

16. • Prepaid cards are the favorite award choice for employee recognition, as measured
both by program planners and recipients.
• Open loop prepaid cards are the most popular type of prepaid card.
• Recipients prefer open loop prepaid cards 5 to 1 over cash even though its a cash
equivalent.
• Reasons include:
– Guilt free, memorable spending as compared to cash
– Association with giver/company/sponsor
– Fulfills all levels of Maslow’s hierarchy of needs
• Data confirms that 60% of open loop card spend is for non-essential items
• Open loop prepaid cards provide cash equivalency with non-cash award advantages
16
Conclusions

17. • 2010 & 2011 Consumer Insights into the U.S. Gift Card Market, First Data; GiftCardRescue.com poll of 6,000 users –
January to October, 2010; Incentive Mag 2011 Gift Card IQ Study
• Huff, C. 2006. So Plastic Gift Cards Are Most Popular Incentive. Retrieved from http://www.workforce.com/articles/so-
plastic-gift-cards-are-most-popular-incentive
• Incentive Gift Card Council and Incentive Research Foundation. 2012. Research Shows Recipients Prefer the Control and
Personalization Gift Cards Provide vs. Cash. Retrieved from
http://c.ymcdn.com/sites/www.usegiftcards.org/resource/resmgr/Docs/ResearchShowsRecipientsPrefe.pdf
• Lipman, V. 2013. 3 Substantive Ways Companies Can Invest In Employee Engagement. Retrieved from
http://www.forbes.com/sites/victorlipman/2013/11/07/3-substantive-ways-companies-can-invest-in-employee-
engagement/
• 2005 Premium and Incentives Report, Promo Magazine
• Schweyer, A. 2012. An In-Depth Look at Prepaid Cards in Incentive, Rewards & Recognition Programs. Retrieved from
http://theirf.org/Prepaid-Gift-Cards-in-Incentive-Reward-and-Recognition.6087263.html#8.
17
References