In the race to the top of consumer wallets, debit is currently taking the lead over credit. Debit cards have remained an essential financial tool as they fit with changing lifestyles and spending behaviors triggered by a shaky economy. This puts debit card programs in a prime role to enable a credit union to (1) satisfy members, (2) position itself to compete in the financial marketplace, and (3) enjoy long-term revenue growth. All these are strong reasons why building your debit program and promoting it to members should be a top priority for your credit union.
1. Member Satisfaction
Debit cards are both convenient and serve current members’ needs. After all, using a debit card is about four times faster than writing a check. A study by Oliver Wyman also shows that consumers’ inclination to use debit for daily expenses has led to a faster recovery rate in debit usage over credit since COVID-19 arrived. At LSC, we ourselves saw an 8.5% increase in debit pin transactions in August.
Debit cards can also be used for online purchases without incurring interest charges. This makes them a good fit for people as they continue to shop more online. Card-not-present transactions for debit have increased from 27% before the pandemic to 40% (Oliver Wyman). Many expect this upward trend to last.
2. Compete in the Marketplace
By emphasizing debit cards that fit people’s daily needs and help them feel in control, your credit union can compete better and stand out. This is especially true for younger demographics who are in the early stages of navigating their financial futures. Even before the pandemic, the Millennial and Gen Z generations favored debit cards for digital purchases (Deloitte Insights). Debit cards build loyalty by giving people a reason to interact with your credit union on a regular basis beyond short term promotions.
3. Long-term Revenue Growth
Everything addressed so far helps lead to long-term revenue growth. A debit program is a solid investment for the future, showing both historic and potential profit. A 2019 study published by Pulse Network revealed that debit programs provide 6% of financial institutions’ non-interest income. Add this fact to the popularity of using debit cards for increasing digital transactions and a debit program has the potential to bring significant future revenue growth.
The timely benefits of debit cards for consumers power the force propelling them towards the top-of-wallet position. By promoting its debit program, your credit union can harness the strength of this force to help members see your credit union as an integral part of their financial goals. Taking active steps to enhance and build your debit program can help your credit union compete better for market share and gain long-term revenue growth. To learn about opportunities for building your debit program, click here.