Bank of America Brings Back Debit Rewards

Bank of America will begin testing a new merchant-funded, Groupon-like deals program to build on consumer spending habits.

January 30, 2012

NEW YORK - Although the banking industry tried to instill fear in their customers that debit rewards would go away with enactment of the Durbin Amendment, Bank of America is proving that argument false.

TIME??s Moneyland.com reports that Bank of America is testing a new "merchant-funded reward program called BankAmeriDeals, in which rewards come in the form of special Groupon-like discounts on purchases from major retailers. The customer??s 'rewards?? show up as bank statement credits at the end of every month." The new debit rewards program is being testing on BofA employees in Nevada and North and South Carolina.

The merchants that are making the discount offers are the ones that will be paying for the new program ?" not BofA.

"This provides our customers with a convenient way to get cash back on the stores they already shop at," BofA spokeswoman Tara Burke told the news source. "It sends them relevant offers" based on their purchase history, she added, but wouldn??t say when BankAmeriDeals will rollout to all customers (but the news source notes that it could be this summer).

Reuters explained how the program works:

"Say a BofA customer shops at a certain women's clothing store often. Based on that spending activity, when the customer logs on to check her account balance, Bank of America might offer her 20% off at that store the next time she shops. She would select the deal and make a purchase ?" at full price ?" at the store using her Bank of America debit or credit card. The value of the discount would then be automatically credited back to her account at the end of the month, providing 'a nice 'cash-in-hand' perception for the customer.??"

According to Dan O'Malley, founder and CEO of PerkStreet Financial, BofA isn??t alone in developing a debit rewards program, but is certainly the biggest player.

"Big banks are raising fees across the board and as they're doing so they're trying to find additional ways to give value to their customers," he told Reuters, adding, "They're trying to get people excited about how much they can earn from these programs and try to camouflage the amount that they're also raising in fees at the same time."

O'Malley also says the move is positive for customers and banks. "This is an exciting opportunity??Banks sit on a tremendous amount of data that they can use to help their customers find ways to save and earn more. Banks are finally waking up to the power of that data to both help their customers and provide more profits for the bank."

BizJournals.com writes that BofA??s new program is "clearly an offer designed to encourage more credit- and debit-card use and that banks are "scrambling to replace revenue lost" from lower debit card fees charged to merchants.

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