The Debit Card Revolution
The first bank credit card was issued in 1951 and America quickly fell in love with plastic. Sure, there were some fees and interest charges, but living on "pay later" credit became a financial lifestyle for millions.
In 1969, the first automated teller machine debuted, and America eventually warmed to the concept of ATMs. At the outset of this "quick cash" era, a few naysayers voiced suspicions about the new electronic technology, stating they'd never use a machine to get their money. That notion has changed quite a bit over the years.
"People under the age of 30 have used ATMs all their life," says CO-OP Network CEO Robert Rose. "Because of this, consumers are more reliant on ATMs and less likely to go to a branch to withdraw money since they have access to their cash nearly everywhere in the world. For credit unions, ATMs have become more important than to other financial institutions because, for a lot of members, the ATM is what they consider their branch."
Originally configured solely as cash dispensers, modern ATMs perform all kinds of functions, including deposits, money transfers and other conveniences like the purchase of movie tickets and prepaid phone cards. While this technology has reshaped-and simplified-daily business transactions, other newfangled e-payment methods are also receiving favorable public reaction.
"What's interesting is that the 30-and-under crowd is now leading the charge into the next evolution in payments-the debit card," says Rose. "More than half of Americans are using debit cards for their purchases, and as this phenomenon expands, the use of credit cards and cash will continue to slowly decline."
The rise of debit was evident in 2003 when, for the first time, consumers made more in-store purchases using card-based payment methods than they did using cash and paper checks. And, by 2010, electronic payments are predicted to account for 75 percent of non-cash transactions, with debit constituting the largest share of the payments pie.
"The rapid proliferation of electronic forms of payment will ultimately benefit credit unions," says Rose. "It basically boils down to efficiency and cost.
The fewer things you can do with paper or by hand-specifically cash and checks-the cheaper it's going to be.
"Getting all of a credit union's debit products, including ATM services, under one processor like CO-OP Network means you can bring real economies of scale to the table. Over the last few years we've broadened our product line and incorporated other aspects of the credit union business, including risk management, into what we do to prepare for this payments shift.
"There's no denying that the era of electronic payments is upon us and is here to stay. By providing multiple services through one platform, CO-OP Network is positioned to be the credit union source for all of our member credit unions' processing needs."