Visa Looks to a Sweepstakes to Promote Check Card Transactions

Visa USA has announced a sweepstakes promotion for this summer aimed at increasing transactions on its signature-based debit card. The Visa check card, on which Visa introduced permanently lower interchange rates effective Jan. 31, offers Visa debit card issuers less revenue than was the case before last year's settlement of a major class-action lawsuit brought by Wal-Mart Stores Inc., Sears Roebuck & Co, and other retailers. In the settlement, the card associations agreed to temporary interchange rates that slashed their debit card pricing by one-third. Both associations have now put in place permanent rates that represent pricing lower than pre-settlement rates. The new Visa promotion, dubbed “Pick Up Your Pen,” starts July 1 and runs through August. Cardholders who use their Visa debit cards and sign for their purchases will be automatically entered, and will have a chance to win back the amount of the purchase. Transactions made on the Web and by mail order, phone, and automatic bill payment are eligible along with point-of-sale payments. Visa is supporting the promotion with statement inserts, direct-mail pieces, Web content, and other collateral that members can customize. This is the third such promotion Visa has run for its check card product. The card company says members that participated in last year's sweepstakes, “Everyday Dreams,” saw spending per account rise by amounts ranging from $7 to $44. Also, the company says a December survey it conducted indicated that 59% of cardholders are more likely to use the check card more often because of such sweepstakes, while 53% are more likely to sign for purchases. Even after the rate reductions that followed last year's Wal-Mart settlement, issuers typically earn more interchange revenue on signature-based debit card transactions than on debit transactions secured by personal identification numbers (PINs).