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Tips for Maximizing Debit Portfolio Performance
Wednesday, January 7, 2015 6:40 AM

By Annette Harris, Practice Lead, PULSE InSightsSM

Every financial institution has the information necessary to dramatically improve the performance of its debit portfolio. Indeed, one of the most powerful advantages payment cards provide is the wealth of behavioral data they generate. By analyzing this data, financial institutions can gain a greater understanding in order to encourage revenue-driving cardholder behaviors, retain profitable card users, and increase their marketing efficiency.

Unfortunately, many financial institutions lack the time and resources needed to analyze their performance data and to formulate strategies aimed at optimizing debit results. In this increasingly competitive marketplace, it has never been more important to close this gap between having information and leveraging that information to seize opportunities.

The good news is that, with minimal effort, we believe that financial institutions can improve portfolio performance.

In our advisory work with PULSE participants, we have seen three primary areas of opportunity for financial institutions to immediately boost the performance of their debit programs. These include:

  • Increasing debit usage in the everyday spend category.
  • Improving customer segmentation to tailor marketing efforts.
  • Paying closer attention to fraud loss ratios, including the difference between signature and PIN.

Everyday Spend

The TSYS 2013 Consumer Payment Choice Study found strong preference for debit as a method of payment, particularly at supermarkets and gas stations. Along with utility payments, groceries and gas are the pillars of the everyday spend category because they are non-discretionary purchases. Whether the economy is booming or in deep recession, consumers will need to pay for gas, groceries, and utilities. Therefore, establishing debit as the payment method of choice for these purchases can have long-term benefits.

The first step in assessing your debit portfolio’s everyday spend performance is to compare it with industry benchmarks. For instance, Americans, on average, purchase gas five to seven times per month, according to various sources. If your cardholders are using debit only once per month for gas, you may have a great opportunity to increase that number.

How can you increase everyday spend? At PULSE we have seen incentives work wonders. One type of campaign to consider is “Spend and Get.” If targeted cardholders—those who only occasionally use their debit card for groceries, for example—purchase a minimum amount of groceries with debit during a given month, they receive a gift card or a credit to their account.

Customer Segmentation

Sending the same message about the same offer to all cardholders at the same time is a tremendous waste of resources. Unfortunately, many financial institutions continue using this outdated marketing approach. There’s a better way. We believe that through customer segmentation, you can target incentives more effectively, establishing new habits that bring your customers’ debit card to the top of wallet.

For example, look at the average number of transactions per month in everyday spend categories. According to the 2014 Debit Issuer Study, commissioned by PULSE, the mean number of monthly transactions for active debit cards is 20.1. If your portfolio is at 15, an easy segment to target would be cardholders who average fewer than 15 everyday spend purchases per month using their debit card.

We recommend tailoring an incentive for a minimum of three months—the time it takes to achieve “sticky behavior”—so the consumer will keep exhibiting the behavior even without the incentive.

Fraud Loss Ratio

Comparing the number and dollar value of PIN transactions per active card with the number and dollar value of signature transactions per active card can quickly identify looming threats to profitability in your debit portfolio.

Fraud loss ratio is typically higher on signature than on PIN, so even if an unregulated financial institution is benefiting from the higher interchange for signature, its higher fraud loss ratio could be eating up that difference and impacting overall profitability of the portfolio.

If this is the case, a financial institution may want to promote PIN, especially to those cardholders who primarily use signature debit. What’s in it for the consumer? Put simply, security. Card fraud is a top concern for your cardholders too, and one that we have seen impact behavioral change in the past.


Whether you dip your toe in or dive in head first, the time to start using the powerful data at your fingertips to grow and improve your business is now. The first step is to access key metrics, such as debit card penetration, activation, average number of transactions, average ticket, average monthly volume per card, and attrition. Compare your financial institution’s performance to benchmarks and then develop your strategic plan to move the needle.

If your financial institution has had difficulty getting started with data analytics, it is not surprising. We anticipate that, over time, these sophisticated techniques will become integrated into just about every business and organization. At PULSE, we have introduced PULSE InSights, a consulting service that leverages more than 30 years of debit leadership to help financial institutions analyze data and improve their performance.

Just remember, even small tweaks in what you are currently doing can deliver big results.

Annette Harris is Director of Marketing at PULSE and practice lead for PULSE InSights. To learn more, visit