HOUSTON - Surcharge-free ATM access is gaining in popularity among debit card issuers, according to the 2008 Debit Issuer Study, commissioned by PULSE.
The same survey also found financial institutions are increasingly offering debit rewards. The 2008 Debit Issuer Study, conducted by Oliver Wyman, provides new data and comparisons to the results of the 2007 Debit Issuer Study, released in February 2007. This comprehensive survey offers a revealing look at debit issuer performance, debit card trends and the latest debit technologies and service offerings.
Among the findings:
ATMs. Among issuers surveyed, 56% have cards that participate in a surcharge-free ATM network, while 84% of credit union respondents offer surcharge-free ATM service to their members for certain "off-us" transactions (transactions made by an issuer's debit cardholders at ATMs owned by other issuers or organizations). Additionally, many financial institutions (48% of respondents) offer reimbursement of ATM surcharges, but usually to only a portion of their cardholders. Of the institutions that reimburse ATM surcharges, 45% limit total monthly per-cardholder reimbursements.
* ATM transaction activity is increasingly "on-us" (transactions made by an issuer's debit cardholders at the issuer's ATMs), further limiting cardholders' exposure to surcharges.
* "Active" debit cardholders (most commonly defined by respondents as those that have made a signature debit transaction within the past 30 days) perform an average of 3.4 ATM transactions per month.
* Heavy ATM users also tend to be heavy debit card users, implying that cardholders do not consider the "cash back" option often available with PIN debit transactions at the point of sale as a substitute for ATM withdrawals.
Debit Rewards. Offering a debit rewards program can have a variety of benefits for card issuers, including an increase in transaction volumes, differentiation from competitors and promotion of debit card use.
The availability of debit rewards has increased significantly since the previous PULSE study, with 51% of respondents now offering rewards, compared to 37% in 2006. An additional 23% of issuers surveyed say they are considering adding a rewards program.
"The increase in debit rewards is driven mainly by a growing interest in cash rewards, which are now offered by 42% of respondents that have debit rewards programs, compared to 16% in 2006," the study's authors said. "Points-based rewards are the most common program type, offered by 58% of the institutions that have programs. Merchant-funded rewards programs are gaining in popularity and far out-pace other program types in terms of cardholder engagement (83%).
Prepaid. Of survey respondents, 61% currently offer open-loop prepaid gift cards, and an additional 16% plan to enter the market. While many institutions sell gift cards, only 1% of consumers purchase prepaid gift cards from financial institutions.
Payroll, flexible spending account and health savings account cards have gained traction among large banks, which offer them to their corporate customers, the study found.
Emerging Payments. PULSE said the 2008 survey is the first Debit Issuer Study to address emerging payments technologies. Among the findings in this category:
* Contactless cards. Ten percent of respondents currently offer contactless debit cards (cards equipped with a device enabling the user to tap the card rather than swipe it). Another 35% say they plan to introduce this capability in the future. Of those that offer contactless, only 24% of their cardbase is contactless, on average. Key barriers to contactless adoption are low merchant acceptance, unfavorable cost/benefit ratios and low demand.
* Mobile banking. Fifteen percent of respondents currently support mobile banking, and another 28% say they are planning to introduce it "soon."
* Mobile payments. Mobile payments (the technology includes mobile phones equipped with payments-enabled chips, as well as message-based payments) is largely in the research phase, with 56% of issuers exploring the possibility of implementing it.
For info: www.pulse-eft.com.(c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com/ http://www.sourcemedia.com/
