Issuers have long grappled with how to push
their debit card offerings to customers in order to boost
activation and usage rates and to reap incremental interchange
revenue from them. Although debit interchange levels are smaller
than credit card interchange levels, issuers can still derive
revenue streams from increasing the usage of debit cards at the
POS, especially at a time when debit cards are being used more for
everyday purchases.
Bank of America came up with the concept of
encouraging greater debit card usage at the POS by attaching a
savings programme to the debit card that automatically rounded up
the purchase amount to the nearest dollar, and depositing the
difference into a linked Bank of America savings account. Its
highly successful ‘Keep the Change’ programme, launched in 2006,
not only boosted debit card usage in this way, but also provided a
valuable source of new accounts and cross-selling opportunities for
the bank.
In just a little more than two years, Bank of
America’s Keep the Change savings programme has helped its
customers save more than $1 billion dollars in customer round-ups
and bank-matching funds. More than 8 million people are now
enrolled in the programme. Since the programme was launched,
customers have accumulated approximately $10 billion in savings,
including the $1 billion in customer round-ups and bank-matching
In early 2007,
Lloyds TSB
of the UK took the Keep the Change template and
launched its own debit-savings proposition, ‘Save the Change’ and
has reported similar success in increasing debit card usage for
small purchases. Now, one of Canada’s biggest banks,
, is getting in on the act with the launch of its
‘Bank the Rest’ offering, announced on 29 April, and the first such
programme in the debit-dominated Canadian market.
As with its forerunners, Bank the Rest enables
Scotiabank’s existing and new customers using their debit cards for
purchases to choose to round up the total purchase amount to the
nearest C$1 or C$5, and have the difference deposited automatically
into their Scotiabank high-interest savings account.
To participate in the scheme, customers need to
open a Scotiabank Money Master savings account, as well as a
Scotiabank current account and debit card.
Scotiabank’s motivation for launching the
programme is partly in recognition of the fact that Canadian
consumers, like their US counterparts, have had difficulty in
setting enough aside in savings. In the fourth quarter of 2007,
Statistics Canada reported that the personal savings rate was on
the decline, falling by 1.4 percent in the fourth quarter of 2006
to just 0.8 percent in the fourth quarter of 2007. However, the
Canadian savings rate is not as bad as the US, where the personal
savings rate was actually negative for a period of time in 2007.
The situation is improving, though, with US personal savings as a
percentage of disposable income rising to 0.3 percent in February
2008, in contrast to -0.1 percent in January.
“With Canadians confronted by the rising cost
of day-to-day expenses, saving for the future can become less of a
priority, especially with the economy underperforming,” said Aron
Gampel, vice-president and deputy chief economist, Scotiabank.
“Canadians can be expected to build their savings during these
challenging times. Every little bit helps towards gaining financial
It is perhaps surprising that such a scheme has
not been offered in the Canadian market before now, given the
popularity of debit in Canada when compared to the US. However,
Scotiabank has looked to expand its debit card proposition with the
launch of a loyalty programme, SCENE, in conjunction with movie
chain Cineplex Entertainment to attract young customers and
encourage usage of debit cards.
Deborah Spence, a Scotiabank spokeswoman, told
CI: “Scotiabank has proactively looked to offer value through other
benefits to its debit cardholders. For example, Scotiabank
introduced the SCENE ScotiaCard programme last year which gives
cardholders the chance to earn SCENE points while making their day
to day purchases. SCENE points are then redeemable towards
entertainment rewards such as free movies and song downloads. The
‘Bank the Rest’ service now builds upon and enhances the value of
the SCENE programme.”
“Scotiabank is looking to the programme to
differentiate and position Scotiabank as an innovator in the
industry. We would like to attract new customers and provide
additional services to our existing customers who make regular
point of sale purchases and who want to accumulate savings faster,”
she added.
If the success of Bank of America’s ‘Keep the
Change’ programme is anything to go by in bringing in new customers
and boosting openings of current and savings accounts, Scotiabank
can also expect to improve its customer numbers by a significant