Financial institutions likely soon will face significant reductions in debit card interchange revenue, but that is not stopping a San Diego-based issuer from launching a program in which customers will receive cash back on purchases initiated with its Visa check cards.
Bank of Internet USA, a unit of BofI Holding Inc., on May 4 announced a free, merchant-funded purchase-rewards program, which provides cardholders “money-saving offers across a network of popular merchants, including restaurants and retail stores nationwide,” the company noted in a news release.
The savings bank is offering rewards based on cardholder spending patterns, and it promotes new offers when cardholders log in to the institution’s online-banking site. To use the service, customers click on the icons to load the offers, which they then automatically access when using their card. Bank of Internet will credit the customer’s account for the offers they redeem at the end of the month.
“We believe this will drive debit card usage and increase retention of our customer base,” Greg Garrabrants, president and CEO, told analysts May 5 during a conference call to discuss company earnings, noting the service also is linked to location-based services to provide benefits based on cardholder location as well.
Customers also may combine their rewards with other offers from participating local and national retailers, according to a demonstration video on the bank’s website. The site does not name participating merchants, and a spokesperson for the bank did not return a PaymentsSource call seeking comment and additional information.
Joe Gladue, senior analyst with Financial Institutions Group at B. Riley & Co. in Philadelphia, says the program represents another way the bank can create a more strategic relationship with its depositors. “It gives them more ways to use their deposits and in general get some better deposits that can stay with them longer and help create more relationships rather than just CD relationships,” he says.
Also during the call, Garrabrants noted the bank in the next several months plans to launch a remote deposit capture service that will enable customers to deposit checks from home using image scanners attached to their personal computers. The bank also plans to extend the service to mobile devices in the next fiscal year, he said.
According to the bank’s earnings release, total deposits as of March 31 were $1.27 billion, up 30.9% from $970.4 million.
