News

Report notes rising consumer demand for new debit services

One of the top items on consumers' wish list is enhanced security — and it's important enough that many are willing to pay for it.

November 18, 2014

A new Insight Report in the Mercator Advisory Group CustomerMonitor Survey Series reveals that while debit card use is holding steady, issuers have a significant opportunity to increase card activation and stimulate greater transaction volume by offering value-added services.

"Consumers and Debit in the U.S.: Rising Demand for New Services," presents the findings of a June online survey of 3,002 U.S. adults, a news release from Mercator said.

"Consumers are demanding more services for their debit cards if they are to activate and use them more often," said Karen Augustine, author of the report and manager of primary data services at Mercator Advisory Group. "Concerns about security, particularly online, and lack of rewards are potential inhibitors to greater debit card use."

More than 50 percent of participants expressed interest in a valuable debit card rewards program and enhanced security — the two most desired services of eight listed. Nearly 50 percent of respondents who want these services would be willing to pay for them, the survey found.

Consumer interest grew in every value-added service asked about in both the 2014 and 2013 surveys; of services they'd be willing to pay for, security and identity theft protection topped the list, the release said

Based on responses, Mercator Advisory Group projected the gross revenue potential for each service. Those with the greatest gross revenue potential were enhanced security and identity theft protection; collision/damage waiver and personal liability insurance for auto rentals; and travel insurance.

Mercator estimated each of these to be capable of generating nearly $700,000 of revenue for issuers based on a 100,000 debit card portfolio. A significant portion of this revenue was expected to come from debit cardholders who do not currently use their debit card, but would use it to obtain these services.

Highlights of the report include:

• year-over-year trending of payment types used in households — including debit card use in the U.S.;
• ownership of EMV chip cards by type; use of chip cards in the U.S. and in EMV markets abroad, and consumer experience using chip cards;
• comparison of debit card ownership with debit card use;
• the shift in debit cardholder demographics;
• consumer use of person-to-person payments and online payment services by brand; primary reasons for using online payment services;
• comparison between specific payment services used by FIs with alternative services used in supermarkets, discount stores, and other outlets;
• account opening experiences, awareness of new fees on checking accounts, and reactions to these fees; and
• cash spending and reasons for cash use.

One of 35 exhibits in the 70-page report: