Winning the Wallet War: Top Tips to Make Debit Card the Go-To Choice

While your financial institution is likely aware that debit cards generate significant interchange fees, it may be selling the complete picture of debit card value short. In addition to an average of $0.34 to $0.52 cents per transaction depending on how much your customers spend and where they shop, frequent debit card usage helps build balances, retain and engage customers and strengthen your brand. With fewer customers writing checks these days, the debit card is one of the most reliable and frequent interaction points with your brand. An engaged, active debit card user will come to you for other products such as small business loans, mortgages, Certificates of Deposit and health savings accounts, boosting your profitability per customer over the life of the relationship. 

Maximizing Profitability

There are, of course, costs associated with a well-managed debit card program. Debit cards don’t take care of themselves, which is a common myth Candace DeBarger, PRI Director of Payments, busts in our blog Debunking Common Misconceptions of Debit Card Profitability. It’s important to have a strategy in place to maximize revenue and minimize costs associated with the debit card program and take steps such as monitoring interchange trends, negotiating PIN network and processor fees and reevaluating surcharge-free ATM programs. Having a product manager to implement strategies and measure success can be a game-changer in boosting profitability. When your institution recognizes the value of debit cards and shapes the program to be the most efficient and profitable as it can be, it’s time to think about winning the wallet war. 

Bringing Debit Cards to Top of Wallet  

With many choices available to their customers to pay for products and services, smart banks are using a variety of tactics to ensure their debit card is top-of-mind during more transactions, DeBarger said. 

• Educate

Everyone who opens an account at your FI should be issued a debit card and educated about its use. Don’t throw up artificial barriers to debit cards such as forcing new customers to apply for one. Everyone gets one when they open an account. Ensuring that your front-line employees are active debit card users will help them understand how to best help new customers integrate the debit card into their routines and troubleshoot any problems.

• Activate

Once the customer has the debit card in their hands, it must be activated. Instant issue cards at the branch ensures the card will be activated right away, rather than depending on the customer to follow up. Show customers how to load the debit card into their mobile wallets such as Apple Pay. According to the Pulse Debit Issuer Study, 45% of debit spending occurred through card-not-present transactions. By activating the card immediately and adding it to the mobile wallet, customers can access and use it instantly before leaving the branch.

• Encourage early use

When the debit card is activated, it’s imperative to get your customers to use the card during the EMOB (early month on the books) period. The first usage is the most critical and acts as an indicator for how profitable that debit card will be for the FI in the future. 

“A customer who uses their debit card in the first two weeks usually produces more than twice the dollar volume and number of transactions than a customer who waits a month to activate their card. This is particularly true for the 58- to 77-year-old cohort. Here, spend and the number of transactions per month can be more than 2.4x greater than for a customer who waits a month to use the card for the first time. If a bank can convert 3% of their new card customers to having a first transaction within two weeks of issuance, it would result in an additional $643k transactions or another $341k in revenue.” – SouthState Correspondent

At account opening, along with educating customers about the debit card, ask them to use it. This is an advantage of the community bank’s close, personal relationships with its customers. Send multiple reminders and offer incentives for using the card for the first time. Anything you can do to drive initial usage will offer dividends over the long-term of the debit card relationship. If they don’t use the debit card within 90 days, they are unlikely to become active debit card holders or use additional products from the bank. 

• Encourage ongoing usage

Implement strategies to address debit card users after 90 days to ensure they keep the card at the top of the wallet. Remind all customers at least once a year of the debit card’s benefits of convenience, control of spending and zero liability for both individual customers and small businesses. Debit cards are now safer than they’ve ever been with the help of online merchants like Netflix that hold a tokenized version of the card from Visa and Mastercard, which increases security. Create regular marketing campaigns paired with incentives targeted to customers at different levels of usage. 

• Innovate

Supporting the debit card program at your financial institution means staying current with marketplace trends. Utilize partners such as processors, networks and consultants to keep your institution on the cutting edge of innovation. This gives your customers confidence that you’re looking out for them as their financial institution of choice. 

An active and loyal debit card user is an engaged customer with room to grow at your financial institution. Paying attention to your debit card program will pay dividends into your future success.  

Resources 

Debunking Common Misconceptions of Debit Card Profitability  – PRI 

2024 Debit Payments Study Reveals Growth – PULSE Network

Maximizing PIN Debit Card Interchange – PRI 

Growing Revenue with Your Debit Card Product – PRI  

How to Increase Debit Card Profitability – SouthState Correspondent 

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 strategic planning to propel growth and improve profitability.