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Debit Cards as Profit Drivers

Debit Cards as Profit Drivers

New developments The revised edition details the advent of emerging concepts including contactless and decoupled debit and explains in depth how these impact upon debit card programmes. The report also covers how changing consumer payment preferences are driving debit cards as the predominant payment method in some markets, and how the debit card itself can be used to influence consumer spending behaviour and deepen customer loyalty and bank relationships with their current account customers.

Capitalising on the debit proposition

The report covers how issuers can capitalise on the debit card proposition to recruit and retain customers through focused efforts on increasing debit card usage, and how the debit card can enable issuers to use transactional data to cross-sell other bank products to current account customers. Examples of successful marketing and crossselling campaigns are included to give an insight into how issuers can use debit card relationships to their advantage.

In depth analysis of:

  • How debit as a form of payment is being impacted by pressures on interchange in some markets, and how initiatives including SEPA are altering the consumer payment landscape
  • The threat from non traditional players
  • The role of customer education strategies
  • The relationship between debit and credit card use
  • How 'Contactless' and other forms of new payment technology are replacing cash payments
  • Maximising loyalty programmes

This report features case studies from new and established markets: Australia, Canada, China, Singapore, 'The Eurozone', UK and USA. They include: Bank of America ,BMO Bank Montreal, China Union Pay, Citibank, City National Bank, CO-OP Financial Services, Google, HSBC North America, Nationwide Building Society, PayPal

The new edition of this industry standard presents debit card best practice in one definitive publication. This report analyses and assesses:

  • The key metrics in a debit card programme
  • Using debit cards to attract and retain current account customers and cross-sell banking products
  • Increasing debit card usage and augmenting interchange revenue
  • Using value-added features to boost the debit card proposition
  • Strategies for positioning debit cards with different consumer segments
  • Creating successful pricing and fee policies
  • Emerging issues including card design, consumer payment preferences, compliance, demographics, fraud and technology
  • The future for debit cards

Who should buy this report

CEOs, heads of retail banking/consumer finance, heads of card divisions, marketing managers, emerging, markets specialists, consultants, sales managers, product managers, strategy consultant, policy makers, analysts, strategic

planners, project managers.

Why buy this report

  • To understand opportunities to drive greater debit card usage, the structure and demographics of target consumers, the international regulatory environment, strategies for success and emerging threats to traditional debit card programmes
  • To acquire further knowledge of market opportunities, particularly with respect to cooperation with financial institutions or participation in loyalty programmes
  • To understand and identify market opportunities
  • To obtain an overview of how banks and card networks view the role of the debit card in driving cash payments towards cards
  • To understand how new payment technology can be used with debit card programmes to drive usage and how data analytics can be used in association with debit cards
  • Executive Summary
  • Breakdown of Report
  • Introduction
    • Debit versus cash, cheques and credit cards
    • Types of debit card
    • Debit
    • Online debit
    • Offline/signature/deferred debit
    • Debit payment structures
    • Payment systems and the card networks
    • A basis for comparing PSOs
    • The cost of membership
    • Non-financial considerations
    • Applying for membership
    • Debit goes cross-border
    • The changing debit landscape
  • Consumer Payment Preferences
    • Debit reigns supreme in the UK
    • Cash no longer king in bricks and mortar locations
    • but remains popular for low value transactions
    • Debit grows in the online space
    • The US gains ground in debit
    • Australia's established debit market
    • Singapore
    • Younger consumers prefer debit
    • Not much difference between the sexes?
    • Cross-border debit continues to grow
  • The role of debit cards and their place in the customer/bank relationship
    • Deepening customer relationships
    • Debit card activation and customer acquisition
    • Educating customers
    • The unbanked opportunity
    • The Hispanic Community in the US
    • Polish Immigration to the UK
    • The US National Consumers League (NCL)
    • Debit cards as a means of cross-selling other banking products
    • Customer data, segmentation and analytics
    • Debit Cards as Profit Drivers
    • Marketing programmes for debit cards case studies
    • City National Bank
    • Bank of America
    • Nationwide Building Society
  • Marketing, loyalty and card design
    • How loyalty programmes have moved from credit to debit
    • Examples of loyalty programmes
    • Chase Card Services
    • BMO Bank Montreal
    • Fifth Third Bank
    • CO-OP Financial Services
    • HSBC North America
    • Citibank
    • Card design and personalisation
    • Co-brand and affinity debit cards
    • Other marketing examples
  • Profitability
    • Fee income
    • Interest on overdrafts or instalment payment facilities on debit cards
    • Indirect drivers of profitability
    • Increasing float income by tying debit cards to non-interest paying current accounts
    • Substituting debit card transactions for more costly banking transactions, including cost savings from reducing cash and cheque issuing and processing
    • Increased customer acquisition, retention, loyalty and share of wallet
    • Cross-selling opportunities
    • Attached benefits such as loyalty programmes
    • Improved brand awareness and brand strength
    • Costs of debit cards
    • Variable costs
    • Fixed costs
    • Indirect costs
    • Other concepts of debit card profitability
    • Interchange
    • Interchange income from POS transaction usage
    • PIN debit and signature debit profitability
    • Payment efficiency
    • Formulating a business strategy
    • Using segmentation to drive debit card usage
    • The affluent consumer
    • Students and young people
    • Profitability model
    • Size of Bank
  • Debit cards and new technology
    • Contactless payment cards
    • Europe catches on to contactless
    • The migration to EMV
    • Case study Smart Chip Technologies
    • Description of the bank:
    • Purpose of Business case for the bank:
    • Loyalty programme established:
    • Open earn/open spend structure to maximise profitability
    • Loyalty sign-up & maintenance process:
    • Loyalty programme results after launch:
    • Issues discovered post deployment:
    • Increasing scope of applications with EMV
    • Levels of migration across the world
    • Debit payments and the mobile channel
  • Debit Card Fraud
    • The fight against fraud
    • Transaction monitoring
    • Secure payment software
    • Card authentication and verification
    • The age of biometrics
    • A pioneering success
    • Asia goes biometric
  • Future Profitability Issues
    • Decoupled debit breaking the link between issuer and cardholder
    • Capital One shifts from credit to debit
    • Tempo takes on the card networks
    • PayPal enters the fray
    • Threats for debit issuers and courses of action
    • Rewards incentives
    • Reduction of income
    • Disruption to payment networks
    • What can debit issuers do?
    • Confusion over risk and liability
    • Taking advantage of consumer confusion
    • Enhancing rewards programmes
    • Who are the likely customers?
    • Examples of non-bank debit players
    • PayPal
    • ELV
    • Micropayments
    • PayPal and Google dominate
    • Potential to drive revenue
    • Technology convergence
  • Debit Card Markets
  • The eurozone
    • Viewpoints
    • Co-branding issues
    • Interchange fees
    • The Payment Services Directive
  • The major global debit markets
  • The UK experience
    • The end of free banking in the UK?
  • The US experience
    • Usage of various payment instruments
    • Cheque payments decline
    • Small-ticket purchases and debit
  • The Canadian experience
    • Migration to chip-enabled cards
    • Profitability
    • Innovations in the market
  • The China experience
    • Profitability
    • China UnionPay
    • Online potential
  • The Australia experience
    • Debit cards
    • Government reforms
  • List of tables
    • Table 2.1: Growth of Australian Card Use
    • Table 3.1: April 2008 PULSE US debit issuer study
    • Table 8.1: Consumers Who Express Interest In Decoupled Debit Cards
  • List of figures
    • Figure 1.1: UK retail spending (APACS) Units:GBP bln
    • Figure 1.2: How consumers make instore payments
    • Figure 2.1: UK average purchase values
    • Figure 2.2: UK number of purchases ('000s)
    • Figure 2.3: UK e-commerce trends
    • Figure 2.4: Number of Australian cards
    • Figure 3.1: Bank Of America's Keep the Change promotion
    • Figure 3.3: Global Consumers: Preferred Purchasing Channels
    • Figure 4.1: KBC card (Source: KBC)
    • Figure 4.2: Wisconsin Chase debit card (VISA)
    • Figure 4.3: America's debit card (Grand Canyon)
    • Figure 4.4: Generic personalised VISA card
    • Figure 4.5: La Caixa debit card
    • Figure 4.6: ANZ Card
    • Figure 5.1 Australian interchange reform
    • Figure 5.2: Retail payment revenue
    • Figure 5.3 European debit card trends
    • Figure 6.1: MasterCard contactless solution
    • Figure 6.2: Visa contactless solution
    • Figure 6.3: Citi "keyring" solution
    • Figure 6.4: UK card fraud
    • Figure 8.1: Decoupled debit transaction routing
    • Figure 8.2: Reward Value to Consumers per US$100 in Purchases
    • Figure 9.1: Transactions per Inhabitant in Europe, 2005 vs. 2012
    • Figure 9.2: European growth rate per instrument
    • Figure 9.3: US electronic payments
    • Figure 9.4: Canadian consumer payment patterns
    • Figure 9.5: Canadian debit card use
    • Figure 9.6: Chinese card circulation numbers
    • Figure 9.7: Chinese POS and ATM infrastructure
    • Figure 9.8: Australian card transactions and values
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