Perkstreet Bank entered the market with a splash, just ahead of the Durbin rules, and promising a new rewards experience for debit cardholders. Eyeing the market from a next-gen lens, the original offers included coffee and songs but ultimately evolved into cash back. After all, Perkstreet is not a bank per se, but is a direct bank front end to a traditional bank back end and thus, one would expect them to be expert in analyzing the market looking for just the right target for this kind of offer. This article discusses the changes made recently to its rewards program, which has been clawed back to 1 percent with some merchant-specific earn rates.
However, what might be the real shift is that the product wasn’t attracting enough cardholders who were willing to keep a $5,000 average balance on hand to earn 2% on their debit card purchases. Perhaps signaling a return to their original coffee/song demographic which demonstrates the challenges presented in maintaining a profitable retail payment franchise – something a debit card alone has a difficult time holding up.
As for the 2 percent card dream in general, Mr. O’Malley said that he still believed that some new company could sustain that level of generosity if it wanted to focus on the sort of high-balance customer who could make the offering profitable.
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