Increasing Debit Card Usage and Your Financial Institution’s Profitability

Posted on Wed, Dec 03, 2014

Most financial institutions across the country offer debit cards to accountholders; however, many financial institutions fail to realize the full benefits a successful debit card program can deliver in new accountholder acquisition, current accountholder retention and overall profitability. A successful debit card program begins with a simple, valuable reward program, which promotes increased usage and is promoted to the right target demographic.

Valuable RewardsYour Differentiating Factor

While the 2014 Financial Brand Survey shows that 33% of credit unions and 37% of banks have debit card reward programs, simply having a debit card reward program is not enough to ensure success. Debit card reward programs with the largest mass appeal are those with cash back rewards. Cash back reward programs are simple to understand for consumers and don’t require your financial institution to manage complicated point or activity tracking systems. While many financial institutions offer cash back reward programs, differentiate yours through relevant branding and messaging related to your target accountholders.

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Identifying and Segmenting of Target Demographic

In a 2013 FindABetterBank survey, 42% of accountholders who indicated that debit card reward programs are a “must have” feature were under the age of 30. The under-30 demographic is ideal for targeting new accountholders. Another target demographic for cash back reward programs is current accountholders who frequently have multiple ATM withdrawals each month as they can save money by avoiding ATM fees. Likewise, accountholders who frequently write checks can benefit from using their debit card with decreased checking fees. Another ideal demographic for debit card reward programs are small businesses. These programs allow small business owners to earn cash back rewards for everyday business expenses while your financial institution benefits from increased debit card interchange income, as well as increased account retention.

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Encouraging Debit Card Usage

Failing debit card reward programs usually stall after the initial program launch. Unlike these programs, the most successful debit card programs encourage ongoing incentives for debit card usage such as first time usage bonuses, frequency bonuses and even bonuses for switching to electronic statements.

Make a commitment to establishing a successful debit card reward program by focusing on a simple, valuable reward program that is promoted to right target demographics with incentives to increase usage. To learn more about debit reward programs and how to increase your interchange fee income download our FREE “Top Shelf Ideas to Increase Your Bottom Line: Growing interchange income while reducing expenses” webinar.

Tags: cash rewards, cash back rewards, cash back reward programs, Customer Acquisition and Retention Strategies, Business Banking, Pinnacle Financial Strategies, Debit Card Programs