Decomposing the Impact of Credit Card Promotions on Consumer Behavior and Merchant Performance

Abstract

Card-based partnerships between banks and retailers have created new opportunities for profit enhancement. We use public data, together with proprietary data from a financial institution to examine the impact of card-based promotions on consumer behavior and merchant performance. The results show that card promotions are associated with increasing customer traffic and transactions from the bank for its merchant partners. We also found significant variation among offer sizes, types, as well as merchant and consumer segments. Our research creates valuable insights and paves the way forward for decision support. \