DJs group general manager, financial services and marketing, Damian Eales, said a major benefit of the card was that customers would receive store gift cards for making their everyday purchases on their David Jones American Express Card.

“Our customers consider David Jones gift cards the ultimate reward for women in particular, the choice and flexibility of gift cards is superior to the inflexible nature of most frequent flyer programs,” Mr Eales said.

“For our customer, turning everyday spending on groceries, petrol, or bills into a pair of sass & bide jeans or an Alannah Hill dress or ModelCo cosmetics has enormous resonance.”

The David Jones American Express card is available for a membership fee of $99 and an annual interest rate of 20.49 per cent.

The retailer had last week decided to cease its rewards program for shareholders from February 1, 2009, after a 12 month review of the program found other major retailer were moving away from this trend.

DJs said in a statement today that in the largest ever direct mail campaign the company has conducted, it had already mailed all of its Storecard customers application forms and they have started to apply.

“An extensive television, press and magazine campaign will follow in coming days,” it said.

The company believes the launch is expected to spark a change to the industry structure of credit cards in Australia.

“The Australian market has nowhere near the penetration of co-branded credit cards we have seen in the US and the UK,” Mr Eales said.

“Internationally, almost every department store offers a card that can be used outside of their store.”

Brands like Café Coffee Day, Pizza Hut, Provogue, Kaya, Fastrack, Gili and a host of others have launched prepaid cards. A prepaid card works like a debit card with a PIN number that can be redeemed at the brands’ outlets. The cards in India are based on the closed loop model — that is, they can be redeemed only at the brand’s stores. “When I have money loaded on the card, the tendency to come to the same place is higher,” says K Ramakrishnan, marketing president at Cafe Coffee Day. The brand’s card Cafe Moments, launched this month, offers a 5% bonus on cards with a value of Rs 100 to Rs 499, 7% on Rs 500 to Rs 999 and 10% on Rs 1,000 and above.

A prepaid card obviates the need to pay cash every time, and it also enables faster accumulation of bonus points or other offers. Prepaid cards in India are currently being used more as gift cards. Some brands have used it to launch a promotion or a service. What the prepaid gift card did for Kaya was to generate incremental walk-ins,” says Suvodeep Das, marketing head at Kaya Skin Clinic. In Kaya prepaid cards, currency can be reloaded in multiples of Rs 500 to up to Rs 2 lakh. Kaya sells about 250-300 gift cards a month.

Global Prepaid Exchange recently estimated that the size of the organized prepaid gift card and gift voucher market in India is Rs 2,000 crore and would grow to Rs 8,000 crore by 2015. “The acceptance of gift cards in proportion to vouchers has increased significantly,” says Pratap T P, chief marketing officer at QwikCilver Solutions, a provider of prepaid card solutions.

However, Devangshu Dutta, CEO of retail consultancy Third Eyesight, says growth in prepaid cards would be restricted by the fact that they can be used only at a particular brand’s outlets. “Also, a customer cannot claim the minimum residual value in the card. He will have to top it up to redeem it,” he says.