Banks are known for creative ways to raise revenues – ATM cash advance fees, in-person banking fees and more. A article reveals a new money making scheme, but this revenue generating venture doesn’t involve customer fees. Banks are selling shopping data to retailers and in turn, retailers are offering targeted sales and special offers to certain customers.


“Here's how it works: Say you use your Citi-issued debit card to buy a pair of shoes at Nordstrom, and then Citi sells that information to a series of retailers. As a result, you receive a coupon from Macy's for a 20% discount on shoes at its store. The coupon is delivered by Citi, however, not from Macy's.” Source:


The article goes on to explain that in order to redeem this coupon, the bank customer needs to respond to the offer and then once you purchase a pair of shoes, your Citi account would be credited to reflect the 20 percent savings.


An analyst quoted in the article claims that this new program is better than Groupon, something that I’m going to disagree with. I have heard far too many horror stories about good banking ideas gone wrong, especially with the mega banks.


I would rather purchase a 20 percent savings up front via Groupon or LivingSocial than rely on my bank to retroactively credit me for an offer that had to be accepted in a very specific manner. There are just too many fault points along the way in which a consumer could do something wrong, rendering the entire offer invalid.


This new revenue-generating model is probably not good news to consumers that are concerned about privacy. I know of some shoppers that refuse to sign up for a store loyalty card because they don’t want their purchases tracked. Programs like the one described in the article may push these consumers to use cash more frequently.


What do you think of the new program?