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Loyalty card

In the United Kingdom a retail establishment or a retail group may issue a loyalty card to a consumer. The card becomes the visible means of implementing a type of two part tariff. Prices for goods sold become contingent on whether the customer possesses a loyalty card. Prices offered to cardholders generally equal or undercut prices offered to non-cardholders. (Critics see the lower prices as bribes to manipulate customer loyalty and purchasing decisions, or as a case of low-spenders subsidising high-spenders.) Similar cards available in the United States of America generally bear the name discount cards.

The card issuer requests or requires customers seeking the issuance of a loyalty card to provide a usually minimal amount of identifying or demographic data, such as name and address. Application forms usually entail agreements by the store concerning customer privacy, typically non-disclosure (by the store) of non-aggregate data about customers. The store - one might expect - uses aggregate data internally (and sometimes externally) as part of its market research.

Many UK retailers have adopted a loyalty card system. The trend towards adoption, however, received a settback in the UK in 2001 when the chain supermarket Safeway (UK) abandoned its ABC loyalty card, stating that it preferred the ability to offer lower prices as a customer incentive rather than a points-based cash rebate. Sainsburys, a rival supermarket, have abandoned their Reward points system in favour of a new card, the Nectar loyalty card, which they issue in conjunction with a number of partners including the petrol suppliers BP, the department store chain Debenhams, and Barclaycard.

Boots, the chain of high street chemists, has a loyalty card which stores the points on a microchip. This has considerable advantages to the retailer from the point of view of data processing, since calculation and allocation of points becomes decentralised to the point of sale (the points-accounting processes can impose extreme demands on centralised computing resources).