In Banking, the More Things Change, the More They Stay the Same

After 45+ years in the banking industry, Tim Holt, founder of Profit Resources Inc., has seen many transformational changes. Yet, remarkably, the foundations of community banking have remained unchanged. He recently reflected on a perception issue of one of these ever-important foundations – customer payments and how community bankers view debit cards versus checks.


Although most bankers are aware of the many benefits of debit cards to their banks and customers, some continue to stay wary of embracing debit card usage due to fraud and the inherent risks. However, debit cards are really nothing more than efficient check replacements, according to Holt. Cards use different technology and applications, but the core transaction and resolution are essentially the same.

“Card transactions are more convenient and immediate, and there may actually be less true fraud or theft than with checks, although some of our banker friends would say the opposite,” he said.

When card fraud does occur, it can often be attributed to “friendly fraud” instead of true fraud. Community institutions tend to not follow through with investigating fraud claims as diligently as they did in the past when dealing with mostly check fraud.


Many people still prefer to write checks to pay bills, although almost all vendors now accept a debit card with no fees. Because FIs directly benefit from interchange income when a debit card is used, employees should be promoting debit card usage over checks. However, employees themselves are often not using the FI’s online banking nor mobile wallet offerings, making it more difficult to promote and sell to their customers.

Online shopping – also known as card-not-present (CNP) shopping – is at an all-time high this year, which means even more interchange income for the FI. However, when customer-facing employees are not using the FI’s debit card, they often lack a natural feel for usage and benefits when the subject comes up in account opening.


Holt reminds clients that debit cards have at least one major advantage over both cash and checks, which is that the debit card generates interchange income for the FI every single time it is swiped for a purchase. Cash and checks are both simply an expense or, in other words, a risk without the reward.

“This is a reliable and embraceable advantage of cards over checks and should really be the only one necessary to promote thought change in an organization,” Holt said.  “We can’t allow the worry of fraud stop the appropriate shift to income-generating payments adoption.”  

Profit Resources specializes in identifying profitability improvement areas for financial institutions through revenue growth, cost control, streamlining processes, and effective use of technology. Contact us to learn more about our personalized approach to propel growth and improve profitability.

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