By 2015 banks will make around $2 billion by just using your shopping habits

Banks always come up with new innovative ideas to earn revenue out of you. The latest idea is not to hit you with a new fee, but instead to use shopping data to their advantage. Most of the nation’s leading banks are now using information from their consumer’s shopping habits. They look into where they do their shopping, the amount they spend, what they purchase etc. This bit of data is then used by them to make money.

Retailers offer targeted discounts through the banks, based on this data. It is sent through email, text messages, or through the online statements that are generated by the banks.

Your data is not exactly handed over to the retailers by the banks. But instead, retailers let the banks know about the type of customers they would like to target. Based on this, the banks send these offers to the customers who may fit the profile. If the customer makes use of the deal, the bank gets to earn a commission out of it. It is as simple as that.

Banks are being forced to hike up their fees due to government regulations. Even the consumer perks have been eliminated. So, it is not really easy for banks to generate decent revenue. But in addition to that they should also be able to get the much-needed consumer loyalty.

A Boston-based research firm known as Aite Group specializes in financial services and has given its forecast stating that the merchant-funded incentives would bring in $1.7 billion-revenue to the card issuers by 2015.Most of the largest banks in the nation as well as the card issuers have already rolled out these programs. Discover and Wells Fargo is also among those that have rolled out these incentives.

About 10% to 15% of the purchase price of the commodity is paid by the merchants to the banks as an average fee, every time a consumer uses the discount generated from the data provided by the bank. This is according to reports fromCardlytics which is an intermediary that works with the retailers as well as the banks.

So, the bank takes a 25% cut out of that fee and then pays the remainder to intermediaries like Cardlytics. Hence, if a customer purchases a couch that is worth $1,000, the merchant will have to pay a fee of around $150 to the bank and the bank gets $37.50.