DALLAS - Point of sale debit cards and credit cards can coexist, issuers were assured this week.
Speaking at the Faulkner & Gray POS Conference, Payment Systems Inc.'s Neil Chambliss sought to relieve concerns that debit services could cannibalize credit card issuers' rampantly profitable businesses.
"People say, 'Well, isn't debit going to eat into the credit card base?' Possibly, but not by much," said Mr. Chambliss, director of financial delivery systems for the Tampa, Fla.-based researcher. "POS debit users have higher outstanding credit card balances than that of non-users."
His message had significance because few debit card issuers were in attendance at the conference in Dallas, a fact Roger Peirce, chief executive officer of electronic funds services for First Data Corp., lamented in his keynote address.
"A plastic card has been reasonably useless unless it can be used at the point of sale," Mr. Peirce said.
Citing research by his firm, Mr. Chambliss predicted a future of strong growth for point of sale debit.
"All the key indicators of growth have been positive over the last five years," he said, noting that 21% of households use debit cards at least once a month, up from up from 9% in 1991.
"Plus, the monthly transaction volume of POS/debit users is increasing," a trend Mr. Chambliss attributed to "merchant acceptance and increased consumer acceptance of the card."
Gauging trends through statistics can be tricky. Mr. Chambliss alluded to the parable of a man who drowned because he thought he could walk across a lake "since it had an average depth of three feet." It seems, however, that the numbers support his prediction.
According to Mr. Chambliss, the average debit user is 43 years old and has a household income of $56,000. "Seventy-five percent of debit users are credit card revolvers, while 45% of them are chronic revolvers," he said.
"The best candidates for POS/debit are bank card revolvers," he said. "All consumer segments show the potential for growth, with the mass market in affluent segments demonstrating the strongest growth potential."
Mr. Chambliss said that of the top 150 financial institutions, 44% promote on-line debit programs, 37% issue off-line cards, and 20% plan to issue off-line cards in the next six to 18 months.
"Regional differences are still there," he said, "but we see them leveling out a bit."
