ST. PETERSBURG, Fla.-Merchant-funded rewards-those coupon, cash-back, and instant savings programs-are gaining steam. But for merchants to keep those discounts coming for the lower-cost alternative to standard rewards, card issuers must show retailers the program's value.

Experts say issuers are going to have to work closely with card processors that offer merchant-funded programs to demonstrate to retailers that the discounts they are providing are actually leading to new business. CUs, too, need to make sure the merchant-funded programs they participate in are simple, concise, and easy to use, with a dash of local flavor to drive card transactions, sources added.

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