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by Michael Misasi 0

Former Capital One executive Dan O’Malley launched Perkstreet Financial in 2008 with the idea that he could create a compelling and sustainable business by tightly coupling debit cards and rewards.

Over the years, O’Malley evolved the business to incorporate social activities into the core product that offered consumers the opportunity to participate in its benefits by crowd-paying with Perkstreet cards, and voting on top merchant rewards each month. One of the first to market with a direct banking product built on a prepaid-card platform targeted at a millennial demographic, Perkstreet announced last week that it is closing shop.

From Daily Finance:

But last year, it started to change how it rewarded account holders: It did away with the $5,000 account threshold and said that all customers, regardless of balance, would get 1% cash-back on most purchases and 2% back at select retailers, including Amazon (AMZN) and Target (TGT). At the time, it said that it was doing so because most account holders weren’t maintaining balances above the threshold.

The fundamentals of a profitable checking account aren’t much different than they were 100 years ago. Banks take in money to lend money and in between consumers use their money on deposit and pay for transactional and exception-based services. Non-interest income got a boost with debit card interchange fees, but those revenue streams have been impacted, even for unregulated issuers. The result is that rewards-based strategies such as Perkstreet, which might have thrived 10 years ago, have a tough time holding up. And this doesn’t bode well for the offers-based market in general since we are already seeing cracks in consumers’ interest in the never-ending stream of promotions and rewards programs. In the meantime, we look forward to Dan’s next big idea.

Click here to read more Daily Finance.

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