Debit Card Issuers Seek New Revenue Streams


In response to the recent announcement by the Federal Reserve, creating a 12 cent cap on the fees merchants must pay banks for processsing debit card transactions, companies are scrambling to release new revenue streams for debit card issuers. Among them is Cartera Commerce, a provider of multi-channel shopping solutions and merchant-funded rewards, which recently launched new multi-channel, merchant-funded rewards solutions. The solutions are marketed as representing a compelling alternative revenue stream and rewards funding model to offset future cuts in interchange fees.

The Fed’s proposal represents a reduction in debit card interchange fees of one-fifth from current average levels. These reductions are part of the regulatory changes called for in the Restoring American Financial Stability Act, and specifically, the Durbin Amendment, which gave the Federal Reserve regulatory power over the interchange fees banks can charge merchants every time a debit card is used in their stores.

“As we suspected last July when the Dodd-Frank financial regulatory reform bill became law, the impact of these coming fee reductions has led banks and card issuers to pursue other sources of incremental revenue, and new loyalty marketing models that don’t require bank funding of rewards,” said Tom Beecher, CEO of Cartera. “Forward-thinking financial institutions began planning for the eventuality of these changes months ago, and one of their strategies has been to invest in next-generation partner-funded loyalty programs like ours.”

Beecher continued, “Cartera already works with 4 of the top 10 largest debit card issuers and the level of incoming inquiries and interest from other banks has only increased in the last 6 months. Cartera’s solutions are a proven alternative to traditional, bank-funded debit card rewards. Now more than ever, they represent tremendous potential to help off-set expected revenue loss while driving card member engagement and spend.”

Cartera’s new solutions for debit card issuers include:

  • Performance-based pricing with no fixed fees and no requirement for banks to fund offers
  • A world-class merchant network, including more than 1,000 national, regional and local merchants, both online and in-store
  • Comprehensive support for all offer types, including statement credits, cash back, points, miles, coupons and point-of-sale discounts
  • Innovative marketing solutions such as web portals, email, mobile and browser apps
  • A best-in-class Statement Offers solution, presenting targeted, highly relevant discount and cash back offers within a consumer’s online banking statement.

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