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Innovation in Credit Card Reward Programs: 529 College Savings Rebates

Illinois has partnered with MasterCard to offer a new innovative credit card rewards program for their Bright Start College Savings Program. Families can now use their Bright Start Futuretrust Mastercard card and receive 1% cash rebate to save and invest money tax free to pay for college expenses. It's the first and only 529 rewards program.

Bright Start makes a one-time $25 contribution upon the first use of the card as well as enhanced rebates at selected retails such as JCPenny 4%, Barnes & Noble 3%, Lands End 4%, Oversotock 3% and many more. This move highlights the ongoing high stakes effort by all payment providers, both conventional (Visa, MasterCard, AMEX & DISV) and new entrants (Google Checkout, PayPal, Bill Me Later, Revolution Money, Tempo) to create incentives for consumers and merchants to use their payment instrument as their preferred form of payment.

The new entrants have been vying for a piece of the payment acceptance market and are trying to get a critical level of wide spread acceptance as quickly as possible - or face the high probability of failure. Revolution Money, for example, has bet that their success in the market place will be driven by their lower fees to merchant accounts and for consumers their PayPal like features in the social media and blog space for small dollar payments.

It's an ongoing challenge to construct the proper balance of driving demand from both the consumer and merchant side. MasterCard's partnership with the State of Illinois demonstrates that the incumbent credit and debit card providers will continually heavily rely on driving their market dominance through consumer demand.

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