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 

Exciting Things Are Happening At JNR


JNR celebrates our nation’s diversity with our co-workers.  In celebration of our nation’s diversity and American Heritage Month, we took part in the #IAmAnImmigrant campaign led by Welcome.us.  We shared personal heritage stories and came to understand one another better. We discovered amazing stories of resilience, strength and perseverance; the values that America was founded on.  When you have a moment please watch our video, which showcases some of the amazing people that make up our JNR Team.

JNR stays ahead of the trends by constantly improving and listening to our followers. Please take a look at our enhanced social media marketing and connect, like and follow us using the links below. JNR will continue to publish interesting and relevant content by posting common interest stories, sharing industry-related insights, highlighting CSR efforts that benefit society, and including lighthearted accounts of our employee appreciation events.

We invite you to interact with us and be a part of our social network by commenting on and sharing our posts.




We believe by embracing our differences we promote a rich company culture, allowing the opportunity to learn from each other.  Sharing knowledge improves contributions to providing excellent services. JNR’s core mission is to support organizations in growing and improving their businesses. By employing a workforce as diverse as our client base, we are positioned to develop and provide solutions that meet our clients’ needs and exceed their exceptions.

We appreciate your trust in us and promise to always do our best.

Thank you,

Jim & LuAnn Jalet and all of us at JNR


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 35 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.

JNR Joins Global Meetings Industry Day

Today Meeting and Event Planners across the globe are recognized for the immense influence Meetings and Events have on our economy.  April 14, 2016 marks the first Global Meetings Industry Day #GMID16 and celebrations throughout the world are taking place to commemorate the importance of our industry.

Business Meetings are often taken for granted, however, study after study shows that it is these large scale dialogue settings that move us forward, spark innovations and solidify relationships, propelling business ahead.

Today, like many days, JNR finds itself teaming with DMC partners, transportation logistic groups, leading production companies, on-site staff, hotels, airline partners and so many others that seamlessly come together to create motivating, change- inspiring Meetings and Events.   With teams in Irvine and Napa, California, Mexico, New Orleans, Colorado and two VPs in Las Vegas for #GMID16 celebrations, we are doing our part to move our economy in a positive direction by facilitating an environment where advancement happens.   We cheers to our colleagues in the industry as we bring attention to this important day.

To learn more visit #GMID16,  #JNRMeansBusiness and #MMB16 and join in the conversation.

Put Cash in The Past

The idea of cash is alluring – it is flexible and it gives you the freedom to purchase anything. Who couldn’t use a little extra cash? However recent studies have shown that in terms of incentives, cash may not be the most effective and engaging reward for long term results.

Contrary to popular belief, the 2015 Landmark Survey shows that when given the option, employees did not automatically choose cash as part of their reward. “The study found that on average the most preferred award experience for large awards is a travel award, presented by travel executives, communicated in a public announcement, and combined with the opportunity for special networking” (Van Dyke).  This is good to know since companies are spending $77B on non-cash awards annually!

While cash rewards provide you with the ability to buy anything you want, The Economic Theory suggests that people are more likely to spend cash on utilitarian items rather than something more personally gratifying (Helion and Gilovich 2014; Thaler 1985). Once the cash is spent, the gratitude tends to go with it.  When employees are provided with an experience such as a bucket list trip of a lifetime, they are able to take away priceless memories while having the opportunity to strengthen their relationships with their coworkers and executive leadership. Not to mention, a vacation is a bit more glamorous than a trip to the grocery store.

More and more we are finding that people are motivated by an experience rather than the tangible reward itself.  What is the recipient’s perceived value of the award?  How does the presentation of receiving the award make them feel?  Everyone responds differently to various incentives so to see the most favorable ROI on your program it is suggested that you craft it with levels of personalization weaving throughout.

In the future, instead of assuming that cash is the best motivator, dig a little deeper and determine what would really engage your sales team, employees or channel members.

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Written by Kalyn Tripodi


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.

Photo: “Flying” by Moyan Brenn is licensed under CC by 2.0

JNR Spotlight: Sleeping While Traveling

Whether you are traveling for business purposes or going on a lavishing vacation to another country, one thing we can all agree on is that sleeping in an economy seat on an airplane can be quite a mission. The small space and the upright seats can make it hard to get comfortable enough to take a relaxing nap. Here are a few tips to keep in mind through air travel that will help you doze off peacefully.


Do not board a plane with the expectation that you will easily fall asleep. This is often unrealistic, causing a traveller to get frustrated when they can not slip quickly into slumber. Putting too much pressure on yourself will almost always ensure you get no sleep. Keep in mind that for the most part, people are so excited to get to their destination.  The anticipation does not always make it easy to relax and sleep.

Seat Selection

With airline seat availability becoming more and more limited for economy travellers, flyers do not always get the seat they want- “the window seat!” This spot is the easiest seat to fall asleep in as you have something to lean on. If the window indent is an inch or two in front of the seat you have the perfect place for your head to lie against. That however cuts out two thirds of the rest of the plane leaving travellers in the center or aisle with less than optimal sleeping arrangements.

Travel Gear

When traveling by air it is important to wear comfortable clothing and loose-fitting shoes. Think about it; are you able to fall asleep in your bed while wearing jeans? If you can’t fall asleep in your own bed then how will you fall asleep in a small upright chair? In addition, due to pressurization our bodies swell so you want to ensure that your clothing doesn’t fit too tight leaving you uncomfortable.

Now that you are wearing the right gear you want to be sure to bring the correct sleep goods to help you achieve your ultimate goal. Three important must have products are a travel pillow, an eye mask and earplugs/headphones. A neck pillow will help your head from falling side to side while the eye mask is a gateway way to escape from your surroundings. The earplugs/headphones are the icing on the cake zoning out any unwanted noises or allowing you to listen to soothing music, calming and relaxing your body.

Eating and Drinking

People don’t usually think about how eating can affect their sleep, but this is an important component that should not be overlooked. Before and during your flight you want to avoid eating anything salty.  Salty foods paired with cabin pressure can lead to uncomfortable bloating. Stash chamomile tea bags and ask the attendant for hot water as the drink cart makes the rounds.  A nice cup of tea can help you reach dreamland mid-flight.

Some flyers order a nice cocktail to help them nod off quicker, but don’t be fooled into thinking you will get a better rest. Studies have confirmed that falling asleep after consuming alcohol will leave you dehydrated, making you groggy when you awake. In addition, it can amplify jetlag and disrupt your sleeping pattern all together.

Add these few tips to your routine when traveling by air next time and arrive at your destination rested and refreshed.

By JNR Incorporated

Written by Tatum Dumont


JNR Incorporated is a results-based, globally recognized leader that specializes in creating custom incentive 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 in 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.