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US Bank Gift Cards
We know that Evolve started charging a 3% fee for processing payment for debit cards issued by some smaller banks. Technically, a gift card can also be fee-free so long as it doesn’t fall under that classification.
We saw a report on Flyertalk of US Bank Visa gift cards working fee-free on Evolve. When we mentioned this on our List of Debit Card on Evolve, a reader commented that they had the same experience with US Bank Mastercards. (Thanks Kim!)
This is great news since that means we still have a way of using gift cards to pay bills on Evolve.
Does it Work?
Okay, okay. But does it actually work?
Yes, I successfully paid a $500 bill on Evolve using a US Bank Mastercard gift card.
Here’s a look at my Evolve account:
The top two cards are US Bank Mastercard gift cards, the bottom card is a MetaBank Visa gift card. As you can see, the MetaBank card shows a 3% fee and the US Bank cards do not.
Here’s a look at my US Bank card transaction history, from mygiftcardsite.com:
Initially, I was having problems adding the US Bank card to my Evolve account, error messages kept popping up. But now I’ve been able to add the cards without a problem and I was able to make a payment.
Why that’s Amazing
Here’s why this is really great news:
- We can still use Evolve as a way of increasing credit card rewards by buying gift cards in a bonused rewards category with a credit card.
- Evolve is actually better now than it was previously in a certain sense since we can now do 4 payments per month to any payee (see Changes to Evolve). If you have a mortgage, for example, you can use four $500 gift cards to make the payment. (Important: See the Flyertalk wiki for more info on making mortgages with Evolve.) You can also pay store credit cards, such as a Target credit card or a Gap credit card on Evolve. Check the Evolve website to see if your bills can be paid with the system.
- US Bank gift cards are ubiquitous, at least in the Northeast. In all supermarkets that I know of they carry MetaBank Visa gift cards and US Bank Mastercard gift cards. They are variable load cards, $20-$500, and come with a $5.95 fee. The Visa cards are usually depleted (I usually get to see the “Time to Refill” sticker on the shelf), but the Mastercard cards are extremely available. MetaBank cards do incur a 3% fee on Evolve, but as we said the US Bank cards are fee-free. Again, it could be that in other parts of the country you won’t find US Bank cards in the supermarket, but if you can find a retailer that carries US Bank cards, you’ve got a winner.
Does it Make Sense?
How do you make sense of this? Why would US Bank gift cards be special?
I’ll turn this question on its head, but first a little background.
The reason Evolve is able to process payments for free is because debit card fees charged by the issuing bank are very minimal. They even have legal limits of how much they can charge which were enacted in 2010 under the Durbin Amendment as part of the Dodd-Frank financial reform legislation. Banks can charge 21 cents per ‘swipe’, plus a tiny percentage – $.05%. So when Evolve processes a $1000 payment using an ordinary debit card, it costs them $.71 (21+50). A $500 payment will cost them $.46. Contrast that with a $1000/$500 credit card payment which could cost them perhaps $20/$10 respectively.
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As part of the law, card issuers with less than $10 billion in assets are exempt from the cost-cap. They can charge higher fees on their debit cards. There’s actually a list from the Federal Reserve which lists one-by-one which issuers are exempt and which aren’t (found here). Here’s a link for the non-exempt list (pdf), and here’s a link for the exempt list (pdf).
If you look at the exempt list, you’ll see MetaBank and Bancorp listed there and thus these card issuers can charge higher fees. These are the types of cards that Evolve is trying to avoid to save themselves the processing costs. However, US Bank is listed on the non-exempt list and thus have the capped processing fees which Evolve allows.
It’s Still a Mystery
To be clear: Everything we just said sounds simple but it’s obviously a lot more complicated than that. Take a look at our List of Debit Cards on Evolve and you’ll see many things there that wouldn’t fit with the above logic. For example, TD Buxx and Nationwide Buxx do have a fee on Evolve, despite that fact that they’re listed in the non-exempt list of the Federal Reserve. Not only that, US Bank Buxx also has a 3% fee on Evolve, despite US Bank being the one whose gift cards are fee-free on Evolve.
Presumably, there’s the company itself and then there subsidiaries of the companies. Since these subsidiaries don’t have $10 billion in assets, they aren’t bound by the fee-cap.
In any case, I don’t profess to know exactly what’s going on from the legal perspective, but it’s definitely possible that certain gift cards or prepaid cards are processed by issuers who are bound by the fee-cap and presumably this is why US Bank gift cards are still allowed fee-free on Evolve.
Final Thoughts
I’m very excited about this development since I have 3 bills that I regularly pay using Evolve. I’ll now be able to pay these bills with US Bank Mastercard gift cards which I’ll purchase at a grocery store for bonus credit card points.
It’s especially exciting that there’s no evidence of a glitch involved here. Glitches are usually short-term usage things, but this can hopefully be sustainable since these cards apparently have the lower processing fees that ordinary debit cards have.
