Maximize Your Debit Card Portfolio’s Potential

A debit card program is one of the most important relationship products at the credit union. Debit card usage continues to rise and is the primary payment method for Gen Y. Plus, in active debit card programs, the average member uses the card 19 times per month! How can you make this important member touch point successful at your credit union?


Debit has been behind the wheel, driving payment industry growth ever since it first slid into the driver’s seat in 2004. That year marked a shift in the payments industry for the first time:  global debit volumes surpassed credit volumes.

Four years later, debit growth remains stronger than ever. Consumers spend $1 out of every $6 on debit. In fact, today’s uncertain economic times have prompted many to prefer spending with “ready funds” via their debit cards as opposed to “paying later” on their credit cards. In 2007, 92% of transactions (40% of volume) were paid for with ready funds, while only 8% of transactions (55% of volume) were paid via general purpose credit cards.

Card Type

Consumer Position

How Consumers Use Cards

Debit Card

Pay Now with Ready Funds

Smaller Dollar Purchase

(92% of transactions)

Items that are consumed quickly

Substitute for cash and checks

Everyday purchases

Used more frequently than credit cards

Credit  Card

Pay Later

Higher dollar purchases

(8% of transactions)


Non-Interest Income
As debit usage has increased, so has interchange revenue. Historically, issuers relied heavily on finance charge revenue from credit card programs to boost card portfolio profitability. However, over the past five years, the percentage of consumers revolving on credit cards has declined. Meanwhile, debit usage has taken off. That coupled with today’s market of decreasing margins has made non-interest revenue increasingly important in managing profitability. In fact, in 2006, interchange income accounted for 36.0% of non-interest income, or $3.3B.

Interchange Revenue = Usage x Avgerage Ticket x Visa/MasterCard Interchange Rates

Debit Card Usage Is On the Rise
Consumers have grown more comfortable with paying with plastic and are reaching for their debit card more often, even for small ticket items. Thanks to the “No Signature Required” regulation introduced a couple of years ago, signatures are no longer required on most purchases of $25 or less at certain merchants. This strategy has been very successful in increasing micropayment transactions and taking market share away from cash, specifically with Gen Y and other debit-heavy users. Think Starbucks and McDonalds. In 2007, Quick Service Restaurants (QSR) reported 36.4% growth!

Another key opportunity for debit growth is in the Bill Payment arena. With Bill Payment, although some members may prefer to take advantage of your credit union’s online banking services or pay online with their credit card, it’s important to remind members that paying bills online with debit cards is also an option. In fact, Bill Pay with debit is gaining more traction with consumers. In 2007, Visa reported 21.6% growth in this category.

Case Study – Increasing Usage of Your Debit Card Program
Whether your credit union leverages these emerging markets or implements other top-of-wallet debit strategies, the foundation to success in today’s debit market is usage and retention. That’s just what Space Coast Credit Union with $1+ billion in assets discovered. They knew they wanted to increase the performance of their debit card program. They started by redesigning their debit card plastic design to appeal to a broader range of member interests. They rolled out new designs that ranged from skateboarding to manatees to racing. They also instituted ScoreCard® debit rewards and provided members with additional information/education on how to use a debit card. The results? They increased volume by 11.84% and increased debit card penetration (as a percentage of checking) to almost 75%. These metrics exceeded their goal by almost 5% - and earned them a CSCU CAMEO Award!

How Can You Maximize Your Credit Unions Debit Card Portfolio’s Potential?

  1. Make debit a core part of your electronic payments strategy. Remember, interchange revenue drives profitability. Set clear, measurable performance goals for your program. Consider the industry performance statistics compared to CSCU credit union statistics. (See chart)
  2.   CSCU Visa
    Sales Volume Growth
    Average Ticket
    Additionally, be sure to include usage metrics in your performance goals. Strong debit card programs report usage statistics (offline and online transactions combined) of 19 transactions per month per member.
  3. Integrate + Simplify + Activate = Success
  4. INTEGRATE debit into the DDA account opening process. Along with online bill payment, debit is the primary account access vehicle– NOT checks. Like SpaceCoast FCU, make sure your debit offering meets your members’ needs, then promote, promote, promote. Consider Western New York FCU with $18 million in assets. With a budget of only $2,500, this credit union held a one-month “Win With a Spin” checking and debit card account promotion. Their goal was to encourage new and existing members to open a checking account with direct deposit, and walk away with a new debit card. For each new service a member signed up for, members had the opportunity to spin the wheel for a prize, including gas cards, movie passes, car washes, I-Pod Shuffle, and a pair of Buffalo Bills tickets. Their results? They opened 45 new share draft accounts and issued 34 new Visa check cards – plus 9 new CDs and 15 new Visa Platinum Credit Cards. A great example of effective cross-selling!

  5. SIMPLIFY the offering and sales message. Make it easy for employees to let members know about your program and be sure to target the right message to the right group.


    Light Users (1-6 transactions/month) – Early education on product features, benefits and how to use; promote security features and control/record keeping features.

    Medium Usage (7-18 transactions/month) – Generate incremental usage with Rewards and promote new merchant categories to expand usage; promote benefits of signing

    Heavy Usage (19+ transactions/month) – Use check card in new emerging channels, use debit card for higher and lower value transactions and reinforce signing.

  6. ACTIVATE your plan. Support your program with strong activation, usage and risk management strategies that focus on education, incentive systems and rewards. Make your budget go further by taking advantage of free and low cost programs and marketing materials available through organizations like CSCU, Visa and MasterCard. Visa issuers can also take advantage of the expertise of Visa’s marketing team by emailing questions to: Debitmarketing
  7. Put it all into action, measure the results and refine your growth plan as needed! It’s not just the big banks that can succeed with debit, credit unions can too!



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Sept. 29, 2008


  • Great article. Lot of good ideas that I can use for the debit card program at our credit union.