Beyond Card Fees: Banks Look To Sell Your DataNew and higher debit card fees may not be enough to satiate the big banks. Financial institutions looking for more revenue are now eyeing another potential source of money: Selling your debit-card transaction data to marketers.

Already Visa (V) and MasterCard (MA) are marching into this new terrain by proposing to sell insights gleaned from credit-card spending data, The Wall Street Journal reported on Tuesday.

The two largest credit card networks have plans to sell marketers an analysis of anonymous data that has been sorted into various demographic segments, such as people who like to travel, the Journal reports. The data could be used to create targeted online advertising. So far, neither company has implemented these plans.

Banks are also poised to get into this business. Silicon Valley startup FreeMonee is one of the third-party marketing companies acting as broker between banks and merchants. The company will not share the names of any partners at this date, but says it is launching a merchant-reward plan with a major U.S. bank on Nov. 17.

Instead of targeted ads, banks' data will drive targeted coupons and deal incentives directly through a customer's checking account. For example, gadget buyers could get a coupon for a major electronics retailer through their bank debit card.

Too Late to Worry About Privacy?

As financial institutions seek to replace revenue cut under the Durbin Amendment -- part of the financial overhaul that limits the fees that banks can charge retailers -- they are exploring new business avenues. New technology -- and consumers' seemingly relaxing attitudes toward financial privacy -- are making these new channels increasingly plausible.

Ron Shevlin, a senior retail bank analyst with the Aite Group, says merchant rewards through online banking make more sense than upping fees because they create revenue through positive incentives. Concerns about privacy are over-inflated he says, as consumer data remains with the banking institution at all times.

In FreeMonee's system, transaction data is stripped of any personal information and completely anonymous when the merchant sees it. This keeps consumers anonymous while still allowing retailers to see who they should target a discount.

"Banks need to replace revenue [lost under the Durbin Amendment]," says Jim Taschetta, the company's chief marketing officer. "Transaction data is accessible. With the right analytics, it can create matched incentives."

Even as better technology protects privacy, consumers are growing more comfortable with targeted advertising and offers.

A survey the company conducted with Harris Interactive showed that 57% of the 2,572 people polled were OK with their bank using purchase history to provide more tailored advertising and coupon offers. For customers under 35, that comfort level rose to 66% saying that they felt comfortable letting their bank use their spending data for customized offers.

So is brokering your transaction data to get deals a bad idea? Paul Stephens, director of policy and advocacy at the Privacy Rights Clearinghouse, says the trend is frightening. But it may be that ship has already sailed. Already millions of consumers readily give up access to their transaction data when using third-party bill pay and budgeting web programs.

"There is no such thing a true free lunch," Taschetta says. "[Consumers have to] make sure value proposition is at the right cost."

Catherine New can be reached at catherine.new@huffingtonpost.com.



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mclkarim

Isn't this against the law?

BofA sent me a letter a couple of years ago about this. I immediately called them and told them they are NOT to give my info to anyone. They agreed, but who knows what they actually did.

October 26 2011 at 12:03 PM Report abuse rate up rate down Reply
Vito

Big banks... still even with OWS they have a total disgard for people and embrace profit at any cost. I sure hope OWS succeeds in changing the world.

October 26 2011 at 8:26 AM Report abuse rate up rate down Reply
jim

I never understood peoples love for their debit card anyway. I use cash or a credit card that I pay off a month later that way I get to earn my huge 0.5% interest for a month. yehaaa!

October 26 2011 at 7:10 AM Report abuse rate up rate down Reply
boarsnest9

Well ! amagin that ?

October 26 2011 at 5:19 AM Report abuse +1 rate up rate down Reply
diamondlotus

Of course, without any regulation and no rules these greedy bastards will make a buck off of us any way they can, with no penalties for violation of our privacy. Infuriating!

October 26 2011 at 2:25 AM Report abuse +3 rate up rate down Reply
mudickson

After all the hype about the banks and the money they have received from the government I decided to see if my mortage company would lower my interest rate since I am an old lady on a fixed income and everything is so much more expensive that I am having a hard time getting by. The government has not given us any COLA's and guess what the anwser was NO. They could refi my loan, my paying $3500 closing and adding 11 more years to my mortgage and my benefit is $165.00 per month...WOW and we were so generous when they were going broke, I got the distict impression that they had buyer lined up around the block to take over my house if I could not pay..

October 25 2011 at 11:39 PM Report abuse +4 rate up rate down Reply
1 reply to mudickson's comment
tropicsilk

Exactly mam these banks would rather you broke your hip. No disrespect meant. I have been defrauded by One West Bank .I'm fighting one district court judge all the way to the supreme court of Hawaii to stay in my home, These heartless bastards sold my house to Fannie Mae for $10 while I was current on my modification payments that they offered. I will not go down without a fight. By the way they knew I was disabled and probably thought that i was destitute. Instaed I hired the best attorney in the state and we are in for a fight. One West bank is rampant with heartless fraud.

October 26 2011 at 4:20 AM Report abuse +3 rate up rate down Reply
mebecarl

This is not news. Further, WAKE UP! THERE IS NO PRIVACY!

October 25 2011 at 10:41 PM Report abuse +1 rate up rate down Reply
freeetob

The name of the game is "deregulation"--in Tea Party speak: "less government." Banks used to be limited to state activity. Deregulate. Banks went national. Deregulate. Banks wanted investment departments. Deregulate. Banks wanted insurance departments. Deregulate. Banks wanted to go international. Deregulate and pay whatever vigorish the International Banking Mafia demands.

October 25 2011 at 9:52 PM Report abuse rate up rate down Reply
1 reply to freeetob's comment
Finchie

That's not totally true. Bill Clinton deregulated the banks in 1999. Banks have been going over statelines since the 70's or 80's. Banks like Chase, Citibank and B of A may have been international even longer than that. The bank I worked with has had their own insurance department that is actually a separate company since 1959.

October 26 2011 at 12:27 AM Report abuse rate up rate down Reply
parthenon1

What's wrong with these banks to go back to what they used to make money on, lending it? One cannot borrow money unless one doesnt need it.

October 25 2011 at 9:28 PM Report abuse +1 rate up rate down Reply
RonRuthNik

There is NO level they won't stoop to, is there?I think I liked them a whole lot better as stingy stuffed shirts that sat on my cash. Paid me 5 1/4% on my savings and begged me to take a home loan at 7%. AND THESE FINANCIAL TRANSACTIONS NEVER LEFT THE BANK I GOT THEM FROM.

October 25 2011 at 9:23 PM Report abuse +2 rate up rate down Reply