How to Discourage Geographic Benefit Exploitation by Cardholders
Overview
This question evaluates competency in behavioral program design, incentive alignment, payments and rewards strategy, customer experience trade-offs, and data-driven measurement within the Behavioral & Leadership category.
Discouraging Free-Riding on Location-Based Card Benefits While Driving Spend
Context
Some cardholders use location-based perks (e.g., partner venue access, local discounts, museum or lounge entry) that can be redeemed by showing the card/app or via geolocation, without actually paying for purchases with the card. This creates benefit costs without corresponding interchange or interest revenue.
Assumption: “Geographic benefits” are perks that can be accessed based on a cardholder’s location or proximity to partners and may not require a qualifying card transaction.
Task
Propose strategies or program changes that discourage customers from only using geographic benefits while not putting spend on the card, while maintaining a positive customer experience.
Your answer should:
- Align incentives (e.g., minimum spend or transaction thresholds, gating/tiers).
- Consider benefit redesign (e.g., card-present redemption, caps/co-pays, dynamic perks).
- Include targeted outreach or nudges to change behavior.
- Note risks, customer fairness, and how you would test/measure impact.
Solution
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