The two last gadgets I bought were from Staples and Radio Shack. Both had mail-in rebates and both came in a form of a Rebate debit card issued by Visa. This is a move from rebate checks that the companies used in the past and I should add a move I don’t like.
In case of a check I would simply deposit it into my account and life goes as normal. In case of a debit card, I can’t just withdraw the funds. According to the instructions I have to use it as a credit card which raises a couple problems. First, I have to keep track of the remaining balance and make sure I don’t overcharge. Second, if I need to charge more than it is left on the card then I have to use partial charge - something online stores don’t do.
The overcharging is a bigger issue that it may seem. No, you don’t get slapped with a fee. Instead the retailer attempts to put a hold on the funds and you can’t use the card until the hold is released (a few days in my case).
So why retailers move to debit cards? Since using cards is not convenient for the customers it has to be done because it is convenient for the retailers. Here are a few things that cards enable retailers to do:
- They have your money until you use it - the balance on the card is in the retailers’ account until you actually use the card to buy something, and every bit helps the business especially in the kind of economy we are right now
- They make money off of your purchases - Visa typically charges a fee each time you use the card for a purchase. The company issuing the card may well get some charge backs. Even if they don’t, I am sure Visa will gladly cover the expenses for issuing and mailing out these cards, something retailers have to pay for themselves if they use checks
- They keep the remainder of the balance - If you discard or lose the card w/o completely using it then the issuer keeps the remainder of the balance. Why would you not use it all? Because of all the difficulties associated with calculating the remaining balance.
All of the above is a speculation based on my experience and common sense, so don’t take things for granted. The explanation however seems very plausible to me and I would really like to find out if I am right, so if you have any insider knowledge on how things work in the marketing department of these companies, please leave a comment.
Photo courtesy of licokao @ Flickr