Understanding Incentive Program Design – Prepaid Card Breakage


According to The Incentive Research Foundation, U.S. businesses are currently spending over $100 billion annually on incentive programs. These incentive programs range from employee recognition to consumer promotions. When implemented properly, incentive programs have the power to influence behaviors desirable to a business. In many cases, an incentive is awarded in the form or a non-reloadable Mastercard® or Visa® prepaid card.

Some use cases include:

  • Rebate paid to consumer for purchases
  • Loyalty programs where consumer accrue points and redeem for prepaid cards or other items
  • ‘Thank You’ gifts for employees or customers
  • Promotional giveaways at events, concerts, conferences, etc.


Incentive, Promotional Prepaid Cards

For Incentive program administrators, offering to pay out an award with prepaid cards has many benefits:

  • Trackable, Visible, and Controllable – ability to know when cards have been received and activated; ability to disable cards if necessary.
  • Eliminate Paper Check – managing paper checks is painful and costly; even in this digital age there are still plenty of paper checks being used to disburse rebates and promotional awards.
  • Branding Reinforcement – as subtle as it may seem – having your corporate logo on the award reinforces to the end recipient the brand with which they have chosen to engage.

Prepaid cards also benefit recipients: they enjoy the freedom to choose their reward based on preference. Prepaid cards are accepted at millions of locations worldwide. Recipients can purchase groceries, book vacations, take the family out to dinner, or a variety of other uses.

That is – if the recipient actually receives and uses those prepaid cards.


Within the context of prepaid incentive cards, breakage is the money loaded onto a card but not used by the card recipient by the time the card expires. The card can no longer be used for purchases at expiration even through the funds are still in the account. In the incentives industry, vendors will often take this unspent breakage as fee revenue. Breakage varies by program, but typically range between 8% to as high as 30%. For example, in a program with $1,000,000 loaded onto cards, there may be $80,000 to $300,000 that never gets used.


There are several ways to view breakage in the context of an incentive card program.

BUSINESS PHILOSOPHY – Conflict of Interest

The primary objective of any incentive program is to drive, incentivize, and reward certain behaviors. When an incentive vendor relies on breakage as the primary source of program revenue, it creates a conflict of interest. The vendor is financially incentivized to minimize the use of the rewards given out to recipients.

A real life example. My wife bought a set of tires and received a $75 rebate prepaid card. She was saving it for a specific purchase but did not pay attention to the expiration date. It expired, and she called the number of the card to asked for a replacement card. They took a hard line and said no. She was frustrated, and guess where she directed that frustration towards? The tire brand (she has no clue who the card vendor was).  The brand lost a customer, and my wife lost what she wanted to buy with that card. The only winner from this situation is the card vendor who pocketed the $75 as revenue. Whose interest did the card vendor serve? A card vendor has said to me: “So what? The consumer already bought the [product] so companies don’t care”. I completely disagree, and I believe most companies that care about their brand would disagree.

With incentive prepaid cards, spend and card usage are measures of engagement. In other words – these vendors are better off financially if the incentive program drives LESS engagement. Think about that. Whether consciously or subconsciously, the vendor will manage the program towards less reward usage and engagement because they are financially incentivized to do so.


Often, a vendor will bid on an incentive program with a low upfront per card fee, knowing that they will be able to keep breakage as revenue.  Clients and buyers who do not know or understand breakage often do not understand the economic model with which incentive services vendors operate. Incentive services companies are not charities – they do not work for free. So the question is whether the incentive program administrators are asking the right questions, and whether the incentive vendor is being transparent.

As an illustrative / simplified example, table 1 below outlines a typical scenario for an incentive / consumer promotion program (10K cards @ $100 each equating to $1MM in prepaid card funding). In this illustrative example, vendors may offer a low $1.95 per card fee but pocket the 15% in unspent funds as revenue when cards expire. Effectively, a corporate client is paying 69% higher effective card fees. Yes, the vendor is “making a bet” and the breakage rate of unspent funds is not guaranteed. Vendors are taking a risk, and arguably have a right to be compensated for that risk, but 69% higher? And furthermore – the more they (even if subconsciously) depress usage and engagement, the vendor can drive up their profits.



Transparency is the Key

There can be legitimate benefits to operating under a breakage model (lower upfront cost, fixed budgets / costs, etc.). However, transparency is the key – so before accepting an incentives services vendor’s offer of a $1.95 card, ask these questions:

1.    How does the vendor treat unspent funds / breakage? What is the real net effective cost?

2.    If you are designing your incentive program to maximize engagement, does it make any sense to design a program where the vendor is financially incentivized to drive down engagement?

Let’s Talk Incentive Program Design

If you are looking to implement an effective incentives program – let’s connect. We would love to learn more about your objectives, and are always happy to be a sounding board as you consider your incentive card program design. Click the link below to reach out to us:


You can also email us at info@jnrcorp.com with any questions.

Written by: Thomas Chiang, President | Card Services & Technology Solutions 

Enticing Mexican Festivities

Mexico is a destination that never disappoints and remains a top pick for Incentive Travel programs at all levels. With a range of hotel, resort and all-inclusive choices and ample activities, this destination has a charm that appeals to every demographic.

We create an authentic, luxury experience for our participants by offering a list of little known Mexican festivities that you may want to consider when booking your next Incentive trip in Mexico.


Although you may tend to think of Rio for Carnival, Mexico has it’s own version of Carnival celebrations that take place the last week of February every year. If you want to see an authentic Mexican Carnival event head to Mazitlan where you will find thousands taking to the streets in elaborate costumes.  The weeklong fête includes parades, balls and merriment going well into the early morning hours.

Dia de la Candelaria

The Dia de la Candelaria is celebrated each February 2nd across the county.  This gorgeous celebration is festooned with thousands candles and flowers of every color.  Families bring a dressed up baby Jesus as an offering of thanks for a blessed year.  In pre-Hispanic times, villagers would bring corn through the streets on February 2nd according to the Mayan calendar in exchange for a healthy harvest.

If you are lucky enough to be in Tlacotalpan, Veracruz at this time, you will see this festival complete, parades and delicious tamales.

Fiesta de Santa Cecilia

An entire festival centered on the patron saint of music is bound to be a great time! Every November in Mexico City, Plaza Garibaldi is transformed into an open-air party with various music styles playing throughout the day.  This party culminates with more than 500 musicians from all backgrounds singing Las Mañantas to the patroness of mariachis.  While in Mexico City, we recommend staying at Four Seasons Hotel Mexico, D.F. , The St. Regis Mexico City or any of the luxury resorts where you will experience the finest accommodations and service.

BPM Festival

And speaking of music, the BPM festival in Playa del Carmen kicks off each New Year with the largest dance music festival in the world.  Thousands of visitors travel to the area every year to take part in dance parties on one of the countries most beautiful Caribbean shorelines.  For a span of 10 days, festivalgoers enjoy 400 artists all while taking in the splendor of Riviera Maya.

From Cancun to Los Cabos, Mexico is a country of great heritage and an endless source of fascination for travelers.  Whether you’ve been once or several times, there is always something new to discover. JNR will incorporate authentic touches into your next Incentive program in Mexico or anywhere in the world you would like to go.

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Information based on A calendar of less-familiar festivities by Meagan Drillinger which was published in Travel Weekly in September 2016.


Written by Barbara Williamson


JNR is a full service, globally recognized leader in the incentive industry offering solutions for Meetings and Conferences, Incentive Travel, Special Events and Entertainment, Prepaid Card Services and AXS Contact Center Solutions. We have over 36 years of experience working with Fortune 500 companies across many industries. Our clients trust our comprehensive suite of solutions that offer a better way to reach performance, productivity and loyalty objectives. JNR tends to every detail of your program to ensure an extraordinary experience for your customers, employees and participants and a favorable return on your investment. We allow you to step away from the logistical details and let you focus on what you do best.

Industry Insight from the Global DMC Partners Third Annual Connection

This weekend our very own Kim Hester served as a Panel Member for Global DMC Partners Third Annual Connection, hosted at the Hard Rock Hotel & Casino Punta Cana, Dominican Republic.

Global DMC Partners is a consortium of Destination Management Companies (DMC) from around the world. Continuously staying up to date on current trends, world events and connecting professionals in the Meetings and Incentive Travel industry with quality DMCs, helps Event Management companies like JNR produce the most exclusive and unique programs possible.

This weekend Global DMC Partners hosted their Third Annual Connection, an event dedicated to bringing together Meeting and Incentive Planners, DMCs, and other program contributors from around the world to share industry best practices, challenges and thought-provoking insights for innovation.

This year, JNR Senior Account Executive and member of the GDP Advisory Board, Kim Hester, took part in panel discussions that ranged from finding new and beautiful destinations, capturing the “wow-factor” in every experience, managing budget and currency concerns, the latest technologies to tips on ensuring safety remains a top priority in the wake of world events, such as the Zika Virus.

JNR is proud of Kim’s involvement in Global DMC Partners and the entire Meetings and Incentive Travel industry. Her travel expertise is unmatched, and we couldn’t be happier to have her on our team!

Our team rocks!

If you’re interested in a Meeting or Incentive Travel Program for your company, or if you would like to learn more about industry trends, click below!

Contact Us

Written by Samir Ahmed


JNR Incorporated is a globally recognized leader specializing in creating custom programs that motivate, engage and reward the employees, customers and channel members of our Fortune 1000 clients. For over 35 years, JNR has designed and delivered a comprehensive suite of solutions including incentive travel, prepaid reward and gift cards, meetings and conferences, events and entertainment, technology solutions and marketing communications.  Our programs produce measurable results and are proven to increase performance, loyalty and revenues.

Top 5 Reasons Your Incentive Should Swap Checks for Prepaid Cards

If you are using checks as a payment solution for your incentive or reward program, it might be time to make the switch to Prepaid Cards. Here are five reasons Prepaid Cards make a better incentive and reward program solution than checks:

A smart alternative to paper checks, Prepaid Cards are an ideal solution for organizations interested in a cost-effective, quick, and memorable way to reward their employees, customers, dealers and channels members. With a wide array of solutions, Prepaid Cards are a perfect fit for:

  • Rebates/Refund Programs
  • Consumer Promotions
  • Loyalty Rewards
  • Employee Rewards
  • Channel Incentives
  • Sales Incentives
  • Safety Rewards


Looking for more on Prepaid Cards? Keep reading:

Is the “Veruca Salt Complex” Influencing Gift Card Trends?

A Look at Prepaid Cards in Incentive, Rewards and Recognition Programs


For more information on Prepaid MasterCard® Solutions and how they can be customized to your goals, give us a call at 800.343.4546, or email us at jnrinfo@jnrcorp.com.


By JNR Incorporated

Written by Kelly Woolsey


JNR Incorporated is a results-based, globally recognized leader that specializes in creating custom travel, meeting, event, prepaid card and merchandise programs that motivate, engage and inspire the employees, customers and channel members of our clients. We have over 30 years of experience working with Fortune 500 companies of many diverse industries. Our programs are tailored to fit the specific needs of marketing, sales, management and human resource professionals. The unique solutions we apply are measurable and proven to increase performance, loyalty and revenues.


Cuban Spotlight: Is Havana the next hotspot for Incentive Travel programs?

Seasoned travel planners are constantly on the lookout for the latest and greatest travel hotspot for Incentive Travel destinations.  Recent years have shown that since many recipients of these programs are well travelled, the expectation has shifted from a predictable vacation itinerary to an experiential journey.  With President Obama’s announcement that the U.S. and Cuba will begin taking steps to normalize their relationship, travel to The Pearl of the Antilles is suddenly on everyone’s radar.

Fun in the sun incentives remain a top choice for companies looking to motivate and reward their partners, and although planners have their choice of exotic island locations to choose from, Havana is added to the short list of locations that are easy to get to and less than 100 miles from our own coast.

With tourism to the island minimal since the 1959 Cuban Revolution and the U.S. imposed travel restrictions that followed, there are a limited number of high-end resorts and hotels for new travellers to consider.  This may work to Cuba’s advantage though, making the island even more of an exclusive destination and driving the desire to bask on the pristine beaches immensely.  The small, secluded island of Cayo Coco is already regarded as one of the best places to snorkel in the vicinity and presumably, this and a number of other resort towns in Cuba, will be met with the challenge of quickly accommodating an influx of visitors.

Cuba offers a variety of landscapes and biodiversity on the archipelago.  Although the beach towns are an obvious draw for tourists, the romantic history, rich heritage and apparent time warp of the cities are equally as enthralling.  Along with the capital city of Havana, Santiago de Cuba and Trinidad hold some of the most eye-catching glimpses of Cuban history on the island.  Cobblestone streets, colorful houses and perfectly preserved sugar mills from the turn of the century make it as though Cuba went to sleep and never woke up.  Cuba’s bounty of natural attractions, paired with some of the most ardent conservation practices in the world, make it one of the best ecotourism destinations in the Caribbean.  From the beaches of Varadero, the UNESCO Heritage Site of Cienfuegos, breathtaking waterfalls in Holguin and the lush vegetation and brilliant white sand of Guardalavaca, Cuba is sure to see tourists flock to the island that previously were unable to do so.

Although travelling to Cuba for general tourism is not yet approved by our Congress, professionals in the industry are gearing up so that when the market does fully open, they can be among the first to offer the stunning Cuban culture to their clients.  We immediately saw Delta Air Lines, United Airlines, JetBlue Airway and American Airlines publically show interest in adding regular flights to Havana.  Both MasterCard and American Express have stated that once the Obama administration lifts the ban on U.S. banks doing business there, they will happily begin accepting credit and debit card transactions from the country.   Conveniences allowing travelers to now take $10,000 with them when they travel make it easier for Incentive trips to become a viable option.

We will watch closely as this continues to unfold.  As tales of the revolution diminish in the minds of younger generations and the overwhelming charm of the Cuban culture banquets through the hearts and minds of avid travelers, the country will no doubt become the generous host that it is known to be by only a limited few today.

By JNR Incorporated

Written by Barbara Williamson


JNR Incorporated is a results-based, globally recognized leader that specializes in creating custom travel, meeting, event, prepaid card and merchandise programs that motivate, engage and inspire the employees, customers and channel members of our clients. We have over 30 years of experience working with Fortune 500 companies of many diverse industries. Our programs are tailored to fit the specific needs of marketing, sales, management and human resource professionals. The unique solutions we apply are measurable and proven to increase performance, loyalty and revenues.

Photo: “View from our balcony” by Still Burning is licensed under CC By 2.0