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'Preferred' method of payment.

Aggressive Twin City Bank Tries New Debit Card

IT'S A CHECK. IT'S A CARD. It's an attitude.

It's the new Preferred Check Card from North Little Rock-based Twin City Bank.

The flashy, hip debit card is for people who desire the spending flexibility of a credit card with the discipline of a traditional checking account.

The concept of debit cards is far from original, but to this point it hasn't really caught on in this area.

Twin City Bank is hoping to milk this useful idea for additional market penetration at a time when, perhaps by coincidence, the merger of The Union of Arkansas Corp. with Worthen Banking Corp. in Little Rock could send some customers shopping for a new bank.

Union had a debit card for several years, and Worthen planned to continue the practice for all its customers when the merger was complete.

TCB's Preferred Check Card is accepted anywhere Visa cards are honored. But, instead of the purchase being charged to a revolving interest account, the bill goes straight into the customer's checking account.

Though TCB only issued the card to its general customers at the beginning of May, the bank already has seen impressive results.

After just a few weeks, the card accounts for 2 percent of the bank's total number of checking transactions, with a daily volume of $50,000.

Bank spokeswoman Susan Blair says 2 percent matches the industry average for debit cards that have been around long enough to have saturated the market. To hit that level of usage this early in the game is astounding, Blair says.

"Over the last year or so, we have had increasing interest from our customers for the debit card product," she says. "We mass-issued 10,000 cards to our customers, primarily those who have been active ATM card customers."

The concept was introduced to this market in the early 1980s by First Federal of Arkansas Savings & Loan. But First Federal's card was discontinued two years ago when the thrift, under regulatory supervision and a different name, went out of business.

As with credit cards, the merchants are charged a "discount fee" of 1-3 percent for all purchases made on the card. The vast majority of that fee goes to Visa, and a little bit trickles into the bank.

Loss Leader

It is obvious the value of this new service is in attracting new customers, not in garnering new revenues.

For the first year, the card will act as a loss leader, as all customers receive it free of charge. After that, the bank will charge an additional $1 a month for the card, on top of other service charges.

Customers seem to be using the card, but are they using it to make significant purchases? That's something the bank won't disclose.

To sway skeptical customers, TCB is planning a major promotion for the card. This month, customers are encouraged to drop off receipts from their Preferred Check Card purchases at any of the 20 TCB branches.

Each weekday a receipt will be drawn at random at every branch and the winning customer will be reimbursed for the purchase, up to $500.

The card may seem a little odd, but it has its advantages.

"It's faster at checkout a lot of times," Blair says. "It's many times more convenient than carrying checks in a checkbook, and it's safer than carrying cash."

Blair says several customers have told her the card is especially convenient for married couples with a single checking account.

"You just keep the receipt and record it later," she says. The new card also doubles as an Automated Teller Machine (ATM) card.

The Preferred Check Card had only been on the street for a few days when TCB began a round of its trademark testimonial ads touting its usefulness.

Blair explains that TCB earlier issued the card to all its employees and to certain customers who had asked the bank to start a debit card. The testimonials were drawn from that test-marketing base, she says.
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Title Annotation:Preferred Check Card from Twin City Bank
Author:Haman, John
Publication:Arkansas Business
Date:Jun 7, 1993
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