Debit cardholders often choose this payment method because it is more secure than carrying cash — which cannot be recovered if lost — and may safeguard them against spending more than they have, which is not the case with credit cards. Debit networks need to ensure that customers feel safe using the payment method, and that means imposing robust security measures and quickly cracking down on any instances of fraud that do slip through.
Bad actors can attack debit cards in many different ways, from deploying card skimmers in physical point-of-sale (POS) devices to stealing payment credentials as well as hacking online databases to make off with sensitive card information. Financial stakeholders like the Reserve Bank of India are therefore working to tighten security measures, such as imposing new rules that make it more difficult for thieves to use stolen card details to make online purchases.
Compelling security measures can encourage consumers who have not yet tried debit cards to be more open to adopting them and promote the payment method’s uptake in new sectors as well. The March Next-Gen Debt Tracker® examines how debit cards are advancing into new areas to serve cryptocurrency holders and even children.
Around The Next-Gen Debit World
Rising generations show a keen interest in debit cards, according to a new report. The study found that 52 percent of Gen Z respondents and 41 percent of millennial respondents reported an interest in using debit cards for most of their transactions. Younger customers are also using debit to underpin newer payment tools such as digital wallets.
Payments companies seek to introduce the cards to even younger consumers, however. Peer-to-peer (P2P) payments app Venmo is said to be in the process of designing a service enabling adult Venmo account holders to give debit cards to their children. The cards would pull funds from the parents’ Venmo accounts, thus enabling them to provide their children with funds for covering unexpected expenses.
Even cryptocurrency companies are turning a new eye to debit cards. This interest comes as part of an effort by the companies to encourage consumers to leverage crypto payments for their daily purchasing habits. Trading platform CoinDeal recently announced a forthcoming debit card that U.S. customers can use to leverage funds stored in their crypto wallets for in-person retail payments. Merchants will receive the funds after the service converts them into local fiat currencies.
Designing For The Future Of Grocery Shopping Payments
Consumers had little appetite for waiting in long checkout lines at the supermarket, even before the COVID-19 pandemic made getting in and out fast a safety concern. Supermarkets and the solution providers serving them have long been exploring ways to accelerate checkout experiences, with some testing the potential of mobile apps to make in-store purchasing automatic. In this month’s Feature Story, Andrew Radlow, chief business officer for checkout-free shopping technology provider Grabango explained how in-store computer visioning and consumer payment apps could unlock fast, grab-and-go purchasing as well as what it takes to encourage consumers to try out new shopping methods.
Get the full story in the Tracker.
Deep Dive: How Card Networks Must Compete For Merchants’ Debit Routing
Merchants accepting debit payments before 2010 were stuck routing the transactions over whichever networks were associated with their customers’ cards. That meant merchants had no recourse when a network charged particularly high fees. The 2010 Durbin Amendment changed all that by giving merchants the power to choose how their debit card payments were processed. Card networks wishing to win more business now need to understand what influences those decisions so that they can better appeal to merchants. This month’s Deep Dive explores the factors that led to the Durbin Amendment’s passage as well as the cost, convenience and security considerations that influence merchants’ choice between accepting PIN or PINless transactions.
Download the Tracker to read the Deep Dive.
The Next-Gen Debit Tracker®, a PULSE collaboration, provides an in-depth examination of debit’s changing role in both banking and retail and gives a data-rich, insightful look on how providers can innovate within this area.