Follow up on this week’s entires (and likely the final entry. Javelin clients are welcome to reach out to me to discuss further!). A lot of the questions I’ve been getting on this are centered on the strategy and the value proposition to CapOne in bringing this product to market.

I see it as mainly an interchange play—bringing a product to market that garners transaction volume—but with additional strategic and competitive implications. They’re definitely playing on consumers’ love of rewards, and may be exposing a weakness. Although debit rewards are gaining momentum, recently gathered Javelin consumer data indicates that only 25% of debit cardholders are actually earning rewards. The CapOne product changes that (without the need for the consumer to go through the hassle of switching banks, remember).

The question is, how are they going to make this product “top of wallet”? Are merchant-oriented rewards enough to drive sufficient transaction volume (or even initial uptake) to make for a successful product? Again, Javelin data indicates that merchant-oriented rewards are far down the list of the types of rewards consumers want (they still want cash back and air miles). So I think the immediate success of the product is suspect, but I suppose it depends on how CapOne is defining that success…