NMG: Next Marketing Guru

What is Loyalty Card?

Loyalty cards are small cards visually similar to credit or debit cards. They are normally made of plastic and contain optical or magnetic encoding which stores card number and other information. These cards can be used at POS (point of sales) to authenticate the customer and using it the customer can avail discounts etc. Modern-day loyalty cards are having chips instead of magnetic strips for more security and data storage. They also come in the form of key-ring cards for the convenience of carrying.

Loyalty Card with Key-ring

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Benefits of Loyalty Card

• Customers like to carry attractive loyalty cards and they feel special if they have such cards. They also tend to shop more if they can get discounts/rebates using the card.
• From retailers’ perspective, using the cards - it becomes easier to authenticate customers. Also, by using loyal cards with unique card numbers – transaction processing as well as tying the customers with database becomes very easy.

Namesake!!

Loyalty cards are known with different names in different regions of globe. In United Kingdom they are called ‘loyalty card’, in Canada they are normally called ‘rewards card’ or ‘points card’ and in United States they are typically called ‘club card’ or ‘discount card’ or ‘rewards card’.

Reward Card

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Types of Loyalty Cards

Plastic Cards

As the name indicates these cards are built using plastic. Normally they are made with high quality PVC. They are mostly multi-layered. They contain printed film inside and a laminated foil outside. Information is stored in these cards using optical sensible encoding which is similar to bar-code. Optical readers can read them. The problem with reading these cards is out of line of sight reading is not possible.

Magnetic Cards

These cards are also basically plastic cards. But they contain a magnetic strip at the back side. The information is stored in this magnetic strip. Magnetic sensor can read them. Normally it has a signature panel. They can be colored also.

Smart Chip Cards

In these cards a chip is present inside the card. This stores the data. The data can be read or written over contact areas. Smart cards use microprocessor chips. These chips are available in 8, 16, and 32 bit architecture. A smart card's data storage capacity ranges from 300 bytes to 32,000 bytes with larger sizes expected soon due to new semi-conductor technology advances. Smart Cards have a number of advantages over other type of cards: a) greater reliability; b) storage can be more; c) better security mechanism can be applied; d) changes of tampering is less etc.

The size of the smart card is determined by an international standard (ISO 7810). Find below the standard dimensions for these types of cards –

Chip Cards without contacts

These cards also contain chips and data is stores in the chips. But main difference with the previous type is that the data is transmitted using electromagnetic waves and readers can read the data without contact. The data can be read even from .7m distance. This type of cards normally have their own energy source and do not need any energy source from outside. With the advancement in RFID technology these types of cards seems to be the future of loyalty cards.