Citizens Bank said Tuesday it will pay customers up to $120 a year to use debit cards and pay bills online, part of a paper-saving program the bank hopes will garner more than 1 million online customers.
The Green program rewards customers 10 cents for each online bill payment or debit-card purchase, up to $10 a month and $120 a year. The rewards will be deposited directly into customers' checking accounts each month.
The program's name also refers to environmentalism. Citizens says Green can save about seven pounds of paper and 63 gallons of water a year by eliminating the average family's 19 paper bills and statements, and seven mailed payments, a month.
"It's broader than just the money you earn. You also help the environment," said Theresa McLaughlin, executive vice president and chief marketing officer of parent Citizens Financial Group, Boston.
"This is something that's emerging" in banking , said Jeffrey Green, editor in chief of CardsandPayments, a trade publication for the electronic payments industry.
Green likens it to a Bank of America program last year in which the bank rounded up to the nearest dollar all debit-card transactions and deposited the money in customer savings accounts. But that program did not include a bill-payment incentive, he said.
Dollar Bank has offered a similar, but more limited, incentive program since late 2006. The Pittsburgh bank pays 5 cents for each online bill payment and debit-card transactions in which cardholders sign instead of using a PIN, or personal ID number, said Vice President Jim Carroll Jr. But the program pertains to only one of the bank's four types of checking accounts.
Citizens customers who opt for the Green program, however, must choose to participate in it instead of Citizens' points-for-merchandise program, said spokeswoman Angela Wagner. It awards points for banking transactions, which can be redeemed for merchandise.
Since 2007, PNC Bank has periodically offered customers between $5 and $15 for paying at least three bills online, said spokesman Pat McMahon. The bank has long awarded points for debit-card use that customers can redeem for merchandise.
National City Bank has offered a similar points program for online bill paying and debit-card use since spring 2006, said spokeswoman Tammy McIntosh.
"Online bill payment rewards is not something I've seen before but the motivation is not new," said Greg McBride, senior financial analyst for Bankrate.com, North Palm Beach, Fla.
McBride said banks until five or six years ago charged customers a monthly fee if they wanted online bank accounts, in order to pay for banks acquiring such systems. Now largely paid for, online banking capability is "almost universal," he said.
"And it's less expensive to process electronic payments than handle checks or cash," said McBride. "Plus, it solidifies the customer relationship."
Debit cards have surpassed credit cards as the most frequently used form of electronic payment. The Federal Reserve Board in December estimated there were 25.3 billion debit-card transactions made in the United States in 2007 vs. 21.7 billion by credit card.
At least 40 million households were using online banking accounts to pay bills, check balances or transfer funds by 2007, said the Federal Reserve Bank of Kansas City.
Green is available at all 1,600 branches of Citizens and its sister bank, Charter One, in 13 states, including Pennsylvania. The banks are planning a multimedia advertising campaign.
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