Magazine article American Banker

Signature Promotions by MasterCard Banks

Magazine article American Banker

Signature Promotions by MasterCard Banks

Article excerpt

In yet another effort to promote signature-based debit cards over PIN-based ones, MasterCard International's member banks have been using a cobranded Web site to give people online shopping discounts as a reward for using signature debit cards.

The company's Exclusives Online program was set up three years ago and lets people register a credit or a debit card to qualify for the discounts. But some participating card issuers -- including Citizens Financial Group Inc. and the Boeing Employees' Credit Union -- are tweaking the prepackaged marketing material to extend the invitation strictly to their debit cardholders.

The clash between merchants and banks over the two forms of debit is as acrimonious as ever, so the banks' moves -- and MasterCard's approval of them -- can only be perceived as fanning the controversy. Merchants, which favor PIN debit because it is cheaper for them, have sued the banks over the issue; on Monday a trickle of documents in the so-called Wal-Mart case were unsealed CHECK TK by a magistrate overseeing the matter.

"In some cases, debit presents a better opportunity," said Jennifer Lavelli, a MasterCard vice president in charge of global interactive marketing. "Lots of issuers are still trying to improve activation for shopping on debit, which is an ideal errand card." Getting more customers to use the card for everyday spending represents "a great value for banks." Banks profit by per-transaction fees levied on merchants.

Twenty-nine issuers have joined Exclusives Online and more than 1.2 million cardholders have registered for the discounts, said MasterCard, which administers the program. Cardholders indicate shopping preferences during registration, and MasterCard uses this information in creating e-mail offers.

Citizens, a Providence, R.I., subsidiary of Royal Bank of Scotland Group PLC, began offering the online program to its debit cardholders in the fall of 2000. Citizens-branded credit cards, both Visa and MasterCard, are issued by MBNA Corp. of Wilmington, Del., which has an agent bank deal with the $53.1 billion-asset bank.

The rewards promotion, mostly featuring 20% off online purchases, is just one way that Citizens is trying to get more customers to favor their debit cards, which are all MasterCard-branded. Citizens also extends a $5 cash rebate to new debit cardholders; only 60% of its checking account customers have debit cards.

Citizens said it also wants to encourage its debit cardholders to use the card as a cash replacement. "We find that people are mostly using their debit cards for ATM transactions just to get cash," a bank spokeswoman said. "They're not using it a lot for signature-based transactions. …

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