Will Swipe Fee Limits End Debit Card Rebates?
Can it really be so profitable for a company to provide a product rebate on a preloaded debit card? That’s what I’m wondering after getting a couple of Verizon Wireless rebates on a Citi debit card. If so then the new rules limiting swipe fees may put an end to the practice.
- Rebates loaded onto prepaid debit cards
- Plastic rebates more likely to be spent than saved
- Card issuer gets swipe fees, at a minimum
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Swipe Fees Driving Use of Plastic for Rebates
It’s true I’ve been under a rebate rock for a couple of years. But if a retailer sends me a rebate in the form of a check, I’ll take it to my bank and cash it or deposit it. If it comes on a debit card, I’ll use it to purchase goods or services.
But unlike if I deposit a check, or cash it and even spend the money, Citi will earn swipe fees from merchants when I use the card to buy something. Congress and the Federal Reserve have moved to limit these fees, but there’s uncertainty as to when this will take effect. It also seems likely Citi’s compensating Verizon Wireless for enabling it to earn these fees. For Verizon it’s like having your cake and eating it too. And for Citi, it’s like eating some of everybody’s cake. Soon though, it may be the party’s over.
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