Fifth Third Bank this week introduced its Duo Card, which is a combined credit and PIN-debit product that the bank said is the first of its kind.
The bank said that customers wanted one card that could access both credit and checking accounts, according to DigitalTransactions.net.
In addition to customer satisfaction, the Duo Card also puts the bank one step ahead of new government regulations, such as the 2009 CARD Act that cut credit card issuers’ pricing flexibility and the Durbin Amendment that slashed revenue collected by banks through interchange fees and allows merchants to have more choice over debit transaction routing.
The Durbin Amendment, however, did not define a difference between signature and PIN debit for interchange fees. If interchange rates for PIN debit and signature are the same, the economics of PIN debit improve because of the authentication form’s lower losses, according to DigitalTransactions.net.
Fifth Third could also gain new revenue if Duo Cardholders use signature for transactions for which they normally would have used conventional debit.
“Conceptually I think it’s a great idea,” Dennis C. Moroney, a research director at the Needham, Mass.-based TowerGroup, said, according to DigitalTransactions.net. “The banks are trying to figure out how to recover from all this stuff.”