Debit card study offered by CO-OP Financial Services highlights debit trends to watch in 2019

CO-OP, Mastercard, and Mercator analyze CU experiences in debit card program management

Credit unions are bullish on their debit card programs heading into 2019, driven by rising instant-issuance capabilities and increases in PIN debit transactions, according to a free, in-depth report now available from CO-OP Financial Services.

Findings from the report highlight several key trends for credit union issuers, including:

• Profitability: Many credit unions surveyed are predicting growth and profitability in the next 12 months for their debit card programs.
    
• Instant Issuance: The prevalence of instant issue capabilities is driving a high ratio of debit cards to checking accounts. Nearly 40 percent of respondents indicate their credit unions have achieved a 70 percent or greater debit card-to-checking account ratio. In addition, 63 percent of the respondents in this study offer or are planning to offer instant issuance.
    
• EFT Network: In-store purchases with PIN and withdrawing cash from an ATM are the two most popular transactions among U.S. debit cardholders. As transactions conducted on the PIN debit networks are increasing, they are having a material impact on several fronts, including revenue, rewards, and fraud management.

In addition to exploring trends like those above, the Debit Benchmark Report includes a comprehensive collection of pragmatic approaches to portfolio management for credit unions looking to improve the overall performance of their debit programs.

“Although the debit card is just one of a growing list of payment mechanisms available to credit union members today, it remains a consumer favorite,” said Todd Clark, CO-OP president/CEO. In fact, debit card payments made up nearly 67 percent of card payments in 2017, according to Federal Reserve Board data reported last month.

“Debit card portfolio management, like every facet of financial services today, is only successful when it’s iterative,” said Clark. “As the leading debit card transaction processor in the industry, we believe it is incumbent on CO-OP to provide our credit union partners with valuable insights into the evolving channel—not only from a strategic standpoint, but also from a programmatic one.”

The Debit Benchmark Report was prepared by CO-OP in partnership with Mastercard and Mercator Advisory Group. The study analyzed survey responses from 240 U.S. credit union participants related to debit card usage, issuance, and management.

Additional takeaways from the Debit Benchmark Report include:

• Rewards: When it comes to incentivizing debit card usage, 55 percent of credit unions are considering or actively offering loyalty rewards programs.

• Digital Wallets: A total of 55 percent of survey respondents have experienced increases in the number of debit cards enrolled in a mobile wallet like Apple Pay, Google Pay, or Samsung Pay. Also, 53 percent have experienced increases in the number of debit card transactions coming from the mobile wallet channel.
   
• Mobile Banking: A full 80 percent of survey respondents believe the ability to check balances and transaction details is extremely important in the mobile banking channel. Roughly 50 percent believe debit card alerts and bill payments are extremely important to debit cardholders who use a mobile app to access their debit card features.
    
• Fraud: Most executives surveyed believe debit card fraud through card-not-present channels will continue to grow and require attention, but they are confident their organizations are currently well positioned to protect their cardholders. An overwhelming number, 91 percent, currently rely on a neural network to detect and stop fraud, while 34 percent have invested more in fraud tools at the processor level in the last 12 months.

Executives, debit card product managers, and staff from all areas of the credit union industry are invited to download the debit report at CO-OP’s website.

About CO-OP Financial Services
CO-OP Financial Services is a payments and financial technology company whose mission is ensuring the success of the credit union movement. CO-OP payments solutions, engagement services and strategic counsel help credit unions optimize member experiences to consistently provide seamless, personalized multi-channel offerings, while delivering secure, sophisticated fraud mitigation service. For more information, visit www.co-opfs.org.

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CO-OP Financial Services is a five-star business partner of Credit Union Resources, Inc., a wholly owned subsidiary of Cornerstone Credit Union League.