Mastercard’s Kirkpatrick: Why Now Is the Right Time for A New Cash-Back Credit Card

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As consumers pay down credit card debt – in some cases with the aid of stimulus checks – and are ever wary about their financial situations, issuers have been muted when it comes to rolling out new cards.

It may seem like a dubious time to introduce a new card. But as Linda Kirkpatrick, president of U.S. issuers for Mastercard, told Karen Webster in an interview, recent announcements of Chase rolling out a new card, Freedom Flex, while refreshing its Freedom Unlimited card, underscore the importance of flexible rewards, with points racked up across grocery and other categories.

Consumers are still spending across digital and card-not-present channels, as evidenced by Mastercard’s most recent earnings report.

Contactless transactions represented 37 percent of in-person payments in the second quarter, up from 28 percent a year earlier. The company has also estimated that as many as 60 percent of consumers will look to use cash less in a post-pandemic world than they did before.

In other words, the card, especially used across digital conduits, is here to stay.

As reported by PYMNTS on Monday (Aug. 31), beginning this month, Chase is introducing the Freedom Flex card, while also upgrading cash-back offerings on the already extant Freedom Unlimited card.

The cards offer 3 percent cash back on drugstore purchases, dining out or takeout, and eligible delivery services, as well as 5 percent on travel purchased through Chase Ultimate Rewards, the points program for Chase’s rewards.

Fortuitous Timing

Kirkpatrick noted that Freedom Flex is the first Chase-branded card issued with Mastercard in half a decade – but the pandemic did not spur (or accelerate) the initiative.

“We’ve been working together for a while to come up with a value proposition that makes sense for today’s consumer,” said Kirkpatrick, adding that “we do have other business with Chase. We’ve done a ton of commercial work with them, but we haven’t issued a consumer credit product, a new and proprietary one, in five years.”

The value proposition, she told Webster, reflects the need for flexibility across everyday spend – and those needs have certainly changed in a commerce landscape that’s been reshaped by the coronavirus.

In an illustration of that flexibility, Freedom Flex cardmembers can get 5 percent cash back on “quarterly categories,” all the way up to $1,500 spent (and then 1 percent back) on categories such as supermarkets and streaming services. The card offers 3 percent cash back on dining and at drug stores.

Separately, as noted on Monday, Freedom Flex cardmembers will have access to World Elite Benefits Mastercard benefits, including purchase and price protections, extended warranties, travel accident insurance and rotating 5 percent cash-back bonus categories. New Freedom Flex and Unlimited cardmembers will receive $200 cash back after spending $500 on purchases in the first three months, plus 5 percent cash back on supermarkets in the first year up to $12,000.

Noted Kirkpatrick, with a nod to the digital consumer: “The design of the product was always coming from the spirit of flexibility and meeting consumers where their needs are – and the evolving definition of what loyalty means.”

It may not be a surprise that grocery had in recent months become a top spend category – but as Kirkpatrick said, the quarterly categories are likely to “flex over time,” especially as consumers start to venture outside the home and into different shopping environments.

To be sure, grocery spend has ebbed and flowed, dipping a bit as restaurants and delivery have been key beneficiaries of consumer spend. Freedom Unlimited cardholders can get DoorDash DashPass for 90 days, followed by a 50 percent discount of the regular rate for the next nine months. The subscription service helps cardholders save money by offering unlimited access to hundreds of restaurants, PYMNTS reported on Monday.

Looking ahead, though certain verticals (such as travel) may be slow to come back, those spending categories lend themselves well to loyalty and rewards features, according to Kirkpatrick.

By way of example, the Chase Freedom Unlimited card has typically offered 1.5 percent cash back on purchases, but the firm has added categories that offer more incentives. Cardholders can earn as much as 5 percent cash back on travel booked through Chase Ultimate Rewards.

“Right now, people are traveling by car, are traveling locally, and aren’t necessarily traveling to different countries – but it’s not going to be like that forever,” said Kirkpatrick.

As she told Webster: “It’s a strange time for everyone, but it’s an opportunity to rethink strategies and get consumers engaged – even consumers who were mostly cash users.”

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