The Bankwatch

Tracking the consumer evolution of financial services

CapitalOne becomes a Bank with checking accounts

Capital One introduce a new product that appears to link a MasterCard with a bank account – a debit card / credit card in one?
Hat tip Javelin

No more check writing with a go-anywhere Capital One® Platinum Debit Card that is tied to your Capital One checking account

This makes Capital One a bank with a checking account. From my reading of their site, which does have lots of words, they are oferring credit card type protection for debit card purchases.

# Use your card instead of checks and cash anywhere you see the debit MasterCard logo
# No annual fee
# Access cash at the ATM
# Save time—set up auto payment of monthly bills
# Platinum benefits
# MasterCard® SecureCode™—know you’re more protected when you shop online
# Zero Liability1 for unauthorized purchases

Bruce at Javelin suggest this “Turns acquisition on its head”. Once I thought about it, I agree with that statement. Acquiring transactions consists of providing the point of payment for customers. Credit cards are differentiated by two key points:
1. availability of credit
2. purchase protection, pay later

The new CapOne product appears to bring those benefits to the debit card user. A while back I predicted the demise of the distinction between debit and credit cards, as a result of the introduction of PIN based signatures on credit cards, which means credit card transactions are final. In plain language that means credit card transactions cannot be repudiated. This means there is no difference between debit and credit cards. The only distinction is the account being charged… the bank account or the credit card account.

I believe CapOne are the first to recognise this evolution, and have beaten the Banks to the punch.

Relevance to Bankwatch:
Chip cards and PIN based authentication change everything. The distinctions between debit card and credit card are now only manifestations of the product group.

What do product want the card to be? Its just up to your imagination, and no more hiding behind fictions of regulation or old style practise.

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Written by Colin Henderson

June 4, 2007 at 22:32

Posted in Payments

6 Responses

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  1. I suppose what has always fundamentally differentiated the credit card is that it is both a payment device and a ready source of (hopefully!) short term lending. However, what is the real difference between this and a debit card on an account with overdraft protection tied to a line of credit?

    How many people pay their whole credit card balance every month, basically reducing the credit card to a payment device? The act of paying the bill is simply an added inconvenience! It would seem that a debit card with the same protections and features as a credit card would resonate with such individuals.

    John Januszczak

    June 5, 2007 at 08:54

  2. […] A debit card that attaches to any checking account An site member brought Capitol One’s latest product to our attention two days ago (Thanks, Susan!). This brand-new product is a debit card with rewards for a supermarket chain. Javelin Research has pointed out that this turns customer acquisition on its head. BankWatch has also written about this new product. […]

  3. […] the word out about it on EverythingCU then. Then I blogged about it on June 5. Javelin Research and Bank Watch covered it on June […]

  4. Coulee Bank ( ) offers an incredible 6.01% APY with their Rewards Checking account. The rate is easy to earn. All you have to do is make 10 check card transactions a month, use e-statements, and do 1 automatic payment a month (they call it ACH). Coulee Bank pays 6.01% on the first $25,000 and 1.01% on anything above that. The best thing about this account besides the rate is it is FREE, you can apply online, and it is from a great bank with real people that answer the phone. And as they like to say, Banking Green has its Rewards. The Rewards Checking account saves paper and preserves our natural resources. No wonder I feel good about recommending this to everyone I know. Check it out. I guarantee you will love it.

    Tony Roberts

    June 4, 2008 at 09:12

  5. The landscape has really changed here. Checking accounts are now paying interest, almost as high as Certificates of Deposits in some cases. Schwab, Etrade and ING have some pretty good offers.

    I’ve found a few and at but that Bankrate has become a bit of mess.

    The only downside to these accounts, is that none of these banks/brokerages have local or nationwide branches. So you’ll probably have to have one of these online checking accounts in conjuntion with a local/nationwide bank. Once it’s open though you can setup direct deposit and start earning interest and have cash readily available.


    Sam G

    September 20, 2008 at 22:52

  6. Here in South Africa

    Credit card = Merchant pays transaction fees
    Debit Card = Customer pays transactions fees

    My vote is to go with Merchant paying the fees 🙂


    January 6, 2009 at 13:22

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