Not having to deal with debit card interchange fee regulation is a good thing for start-ups like Perkstreet Bank, the first organization to promote itself as a Gen-Y alternative to traditional financial institutions. With Bancorp Bank in the background (exempt from Regulation II interchange fee caps due to its asset size) Perkstreet is free to promote its rewards program to consumers with everything it’s got.
Consumers are drawn to cashback programs, and Perkstreet currently offers 2 percent for debit card purchases. Consumers seeking an alternative account that isn’t a prepaid card might find their way to Perkstreet. But as the recent adjusted (downward) figures from CUNA on the numbers of accounts that switched from banks to credit unions on Bank Transfer Day show, inertia is still a big hurdle to overcome.
Because PerkStreet does not have to worry about making up lost revenue on reduced interchange fees, it can focus on increasing benefits for customers, O’Malley said. “The biggest thing on our plate is just continuing to increase amount of cash-back” rewards to consumers, he said.