There is some untapped debit-card business out there, according to a MasterCard Advisors survey of debit users. Study results reveal that 31 percent of cardholders with annual incomes above $75,000 “do not regularly use their debit cards for purchases. Rewards programs proved to be an incentive: cardholders enrolled in rewards programs used their debit cards for 36 percent of their total monthly spending compared with a 30 percent spend for those respondents not earning rewards.

“Certainly we see debit users moving away from cash and checking transactions, not just card-for-card transfer,” says Greg Howe, global solutions leader at MasterCard Advisors.  The survey shows a “growing acceptance of debit—three times as many customers are increasing their use as decreasing their use of debit cards.” Howe acknowledges that debit does “compete against all payment vehicles,” including credit cards.

How can issuers encourage the remaining one-third of higher-income debit cardholders to start swiping? “They need to look at customer/merchant relationships,” says Howe. “Joint offers with merchants have significant promise. Couponing works. And the co-branding approach is gaining more prevalence, although it’s not as mature as the credit side.”

Much work remains on the education side, too. “Cardholders differ on how they view debit. Some consider it a valuable control on spending, because transactions are tracked. Other customers worry that it lessens control because they feel they have to record transactions as they do with checking. There are concerns about overdraft.” The worriers provide banks with an opportunity to offer overdraft protection. “In the end, the major tools for reaching these customers are education and marketing,” Howe concludes.

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