The recent decision of one of our banks to increase the cashback percentage on the purchase of groceries and petroleum products to 4 percent for those selecting to pay by a certain branded credit card raises several opportunities.
It is not always easy for the layman to understand the logic of marketing strategies of some of our financial institutions. A classic case in point was another bank charging a monthly service fee of $12 per month for a no-risk debit card, but soon after introducing a no-cost joining or annual fee credit card with a cashback benefit.
Perhaps one day, someone within these organisations could explain the rationale to us lesser mortals.
Would applying a similar cashback feature to our tourism product, including restaurants, activities, attractions, hotels and other lodging options, stimulate local usage especially during non-peak periods?
Of course conditions could be easily applied, such as only offering the cashback for early dining bookings where an otherwise empty table could be filled at 6. 30pm to qualify for the rebate, then filled again at 8. 30 pm, but would not receive the same incentive.
Likewise for the activities and attractions!
There must be some individual historical information of times where increased numbers would be desirable.
Whether this, could all be put together most efficaciously through existing initiatives like re-DISCOVER and the Staycation programme, or a new structure created under the national trade association (BHTA), is open to discussion.
Not for a second am I advocating the increased irresponsible use of credit cards, as many, including ourselves, simply utilize them as a simple and inexpensive payment method which allows monitored spending and monthly settlement. Online banking has made this type of transactions even easier in recent times.
In this case, we are not encouraging anyone to use the cards for overseas expenditure, as all payments would be made in Barbados dollars involving little or no foreign exchange loss, so it is particularly appealing to the current administration which would also greatly benefit from additional VAT collection.
While largely intended as a local targeted marketing concept, visiting friends and relatives could also take advantage of the savings. Banks can effortlessly monitor any increase in card revenue generation as a result and could limit the promotion in duration. This would allow careful evaluation of the cost-effectiveness, during the pilot project timeline.
It must be clear by now that our banks are risk-averse to investment and lending for new and existing tourism projects. Often demanding a high level of collateral required to borrow which is out of proportion to the funds required.
So could this concept be another way to help increase the viability of our tourism partners without the banks feeling they are being placed at risk?