Redemption Loans
Members select redemption products on a Web catalog and redeem their points to obtain the product. In some cases, the members might not have a sufficient point balance and would have to forgo the redemption.
To increase member satisfaction, the loyalty program allows a member to take out a loan to provide the extra points required for the redemption. This facility is similar to a bank providing an overdraft facility to a customer on the customer’s bank account. The loan facility is extended only to members who have moved up to higher tiers of the program. The next accrual activity pays back the loan.
The loyalty administrator specifies the maximum loan that members can receive. The actual loan that a member receives is the difference between the redemption price and the member’s point balance, if it is less than equal to the maximum loan limit.
The following topics discuss redemption loans: