Wal-Mart Stores Inc. on May 17 announced what it claims to be the only cash-back incentive for customers using general-purpose reloadable prepaid debit cards. Consumers who use the company’s Visa-branded MoneyCard for gasoline purchases will receive 1% cash back nationwide through Dec. 31.
Wal-Mart did not provide any additional details about the program. Company executives were not available to answer questions by deadline.
The promotion coincides with the start of the summer season, the Bentonville, Ark.-based retailer said in a new release. “It’s one more way we can help families save,” Jane Thompson, president of Wal-Mart Financial Services, said in the release.
Other general-purposed cards have offered cash-back incentives, according to Ben Jackson, senior analyst with the prepaid advisory group at Mercator Advisory Group.
In 2005, BankFirst Inc. issued the MasterCard-branded Mother Love prepaid card. Consumers who registered for the card with the now-defunct AmeriDollars cash-rebate program could receive up to 10% cash back from participating merchants.
Wal-Mart’s primary reason for adding such an incentive to the MoneyCard is most likely to “promote loyalty and the use of their card and get those customers using the cards in more places,” Jackson says.
A problem, however, may arise in the form of debit card holds, Jackson says. Card issuers historically have discouraged prepaid cardholders from using those products to pay for gas.
Signature-debit transactions have holds that can range between $50 and $100 and last up to three days, even if the consumer bought only $10 worth of fuel.
PIN-debit fuel purchases have holds that should last only a few minutes. After gas fill-up is complete, the issuing bank is notified automatically, and the hold amount should change immediately to the amount the customer actually spent.
“This [promotion] may be a way of getting more people to use these cards at gas stations,” Jackson says. That could start a trend, as most prepaid providers keep a close eye on anything Wal-Mart does in the space, he adds.
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