Wall Street already likes Groupon and Living Social for their IPO potential. However, one research firm thinks the nation's banks could see even greater benefits by teaming up with the "daily deal" websites and issuing co-branded rewards credit cards. According to Lightspeed Research spokesman Greg Flemming, many daily deal shoppers already hold some of the banking industry's best credit cards, making them attractive prospects.
A phone survey of 1,500 Americans found that frequent Groupon and Living Social shoppers often earn more than $75,000 per year. Most daily deal subscribers already maximize their savings by pushing more than three times the typical amount of charges through their credit cards every month, while paying their balances in full after every statement cycles. Lightspeed's research found 34 percent of Groupon users were interested in a Groupon-branded credit card, while 27 percent of Living Social customers were hoping for a card bearing the logo of their favorite deal site.
A win-win proposition
While Lightspeed's research echoes the spending habits of high-saving consumers detailed in Thomas Stanley's "The Millionaire Next Door," banks have found themselves embracing customers that some executives once called "deadbeats." Banking regulations and shareholder pressures have forced banks to float more of their cash to low-risk borrowers. Offering the best credit card deals to cardholders who pay off their monthly statements prevents banks from paying costly cash management fees to the Federal Reserve. Encouraging cardholders to make signature-based credit card transactions in exchange for rewards generates short-term revenue from merchant processing fees.
American Express hopes to bypass daily deal sites altogether with its Smart Offers API, a system that enables merchants to pre-program special deals directly into the accounts of mutual customers. Instead of printing a coupon from a Daily Deal website, AmEx cardmembers can check for special offers online and simply swipe their cards as usual to receive statement credits. The Smart Offers API avoids much of the confusion and the fraud attempts that have accompanied daily deal websites since they emerged a few years ago.