Debit Rewards Provider PerkStreet to Shut Down (Aug. 13, 2013)
Aug. 13, 2013
PerkStreet Financial, a Boston-based cash-back debit rewards provider, has announced it will shutter its services next month, citing a lack of financing along with regulatory restrictions that limited its ability to compete. In a notice posted on the company’s Website, PerkStreet said it will cease business operations on Sept. 26 and will no longer offer customers rewards for using the company’s debit card. In a statement posted on its site, PerkStreet’s leadership team said the company had been “pursuing additional investment to grow our business to the point it could be self-sustaining. Unfortunately, we were unable to secure more funding and now must begin the process of closing the company.”
In an interview with the New York Times, PerkStreet CEO Dan O’Malley added that regulatory changes made fewer bank partners available for the company, while debit card fee restrictions limited the revenue existing bank partners could earn from merchants who accepted the company’s PerkStreet debit card.
Launched in 2008 by former Capital One executive O’Malley, PerkStreet offered cash-back rewards for using its debit card—sometimes up to 5 percent. Last year, however the company scaled back the percentages. O’Malley told the New York Times that the company was paying the rewards out of general corporate funds, and ran out of money to continue making the payments.
PerkStreet users whose debit accounts were held by The Bancorp still will be able to use their PerkStreet debit cards, but will no longer receive rewards. Those accounts will receive a special promotional interest rate on balances. Users whose account was held at Provident Bank can use their cards until Sept. 23, and will then have any remaining balance mailed to them in the form of a paper check.