Why Debit Will Be Big Focus In Q3 and Q4

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WILMINGTON, N.C.-Slow economic progress in the last two quarters will actually increase the emphasis on debit this year, predicts one analyst.

Bob Giltner, chief DDA strategist for Velocity Solutions, believes a continued slow recovery that will keep lending down will force credit unions to look more toward debit as a revenue source because the plastic has a large effect on the entire member relationship.

Giltner pointed out that many credit unions, as a result of the Durbin amendment, have performed a great deal of analysis on their debit programs and have learned that the revenue the cards generate go well beyond interchange income.

"Debit affects the total relationship. Credit unions began to find out that debit cards significantly impact checking revenue as well as relationships per household and member retention. They are all linked to debit usage."

Giltner advised credit unions to get "back to the basics" of what they were doing with debit in 2010 before they became "addled" by the potential loss of interchange revenue spurred by Durbin.

"Now that many of the facts are on the table about what debit means to the entire member relationship, I think credit unions will get more debit cards in the hands of more members and incentivize use of the cards."

Some of the "renewed zeal" for debit will also be driven by the fact that the reduction of debit interchange revenue will not be as great as expected, whether Durbin passes or not, Giltner said. "And, In my opinion, the Durbin amendment will be delayed."

For info: www.myvelocity.com

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