Problems with Debit Cards in Recognition

I’m often asked why debit cards aren’t a good option as part of a reward mix when planning a strategic employee recognition program. The primary reason is debit cards are essentially equivalent to cash. As I’ve said before, cash doesn’t motivate. It compensates. Each element of a total rewards package must have its own “currency.” Cash is the currency of compensation, not motivation or recognition. Sincere appreciation of effort will motivate far better than cash that only becomes an expectation and entitlement.

Aside from the cash aspect, debit cards just don’t work in global recognition programs for three key reasons:

1) Don’t translate globally – complicated usage requirements, intentional breakage and little to no global availability in all local currencies

2) Exorbitant and often hidden fees – currency conversion, overseas redemption, taxes, and usage fees (as discussed in this New York Times article) make debit cards actually worse than cash

3) Lack of transparency – difficult for recipients to track balance, actual balance in local currency, and places where the card can actually be used

By pre-selecting gift cards in the local currency from local merchants, recipients are guaranteed to have a hassle free, enjoyable shopping, dining, entertainment or adventure experience of their choosing with no hidden fees, extra taxes or intentional breakage. Employers are assured of a predictable, explicit budget line item to plan for taxation gross-up and program budgeting. Debit cards simply offer too many opportunities to confuse, distort and mismanage the recognition experience.