Sunday, June 09, 2002

What's the Buzz

Check card users to get rebates

        In what will be a true novelty for any bank these days, the parent of Firstar Bank will soon pay consumers to use their check cards.

        Firstar, to become U.S. Bank in Greater Cincinnati this month, will launch “Checking That Pays,” a cash rebate program that will pay its customers up to 1 percent of the amount of total purchases when they use their check card.

        The program, among the first of its type offered by any bank nationally, will help Minneapolis-based U.S. Bancorp attract new customers, build loyalty and retention among existing customers and quietly create a savvy way to generate extra fee income.

        Firstar/U.S. Bank customers who use the program will get a half-percent rebate for their first $3,000 worth of annual purchases made with their check card and 1 percent cash back on all such purchases more than $3,000 in that year.

        To qualify, customers must sign up for the debit-card program and use the card on transactions that require a signature. They will not get rebates for using their debit card on a personal identification number (PIN) transaction.

        Kathy Beechem, a Firstar executive vice president in Cincinnati, said the program will give customers a reason to use the card instead of cash or writing a check.

        Customers also be able to use the program regardless of what type of checking account they have.

        “Where else can you get a debit card that's free, pays you interest and gives you cash back?” Ms. Beechem said.

        Although more convenient and different, the program will help the banking company make money and cut costs.

        The program will allow U.S. Bank to reduce costs by not processing as many paper checks. It also will be paid by merchants when customers sign for purchases, said Dave Gosnell, senior editor at ATM & Debit News, a Chicago-based trade publication.

        He said debit-card-issuing banks typically can generate at least two to three times as much revenue for signature-based transactions as for PIN-based or ATM-type transactions.

        “It's very clear the bank is using this as a financial incentive to get consumers to use their debit card more, particularly for signature-based transactions,” he said.

— Jeff McKinney

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