3 Strategies to Make Your Debit Program Best-in-Class
Debit issuers today face several challenges, including flat or declining card bases, the continual threat of fraud, and rising digital demand. While these issues can be obstacles to overcome, they also present an opportunity.
In a recent presentation, PULSE marketing executive Steve Sievert described how issuers can create best-in-class debit programs despite these challenges by applying best practices in three areas: digital demand, the transaction experience, and key performance indicators. He went on to explain how an issuer’s marketing program can help reinforce these enhancements.
“Issuers can best respond to today’s challenges by focusing on three key areas: digital capabilities, the customer experience, and debit program performance.”
Steve Sievert, PULSE Executive Vice President of Marketing and Brand Management
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Digital demandMobile and card-not-present (CNP) debit transactions continue to gain popularity with cardholders. CNP now accounts for over one-third of POS debit transactions and nearly half of debit spend, according to the 2024 PULSE Debit Issuer Study. And consumers show a strong preference for debit over alternative payment methods. A Discover-sponsored survey by Datos Insights revealed that 66% of consumers report using debit at least weekly and 79% at least monthly. Similarly, 30% use a digital wallet linked to their debit card at least weekly and 48% do so at least monthly. Younger and higher-income consumers make more contactless and digital wallet transactions, so enabling these capabilities can attract high-usage cardholders. “Position your institution for digital payment use cases, including wearable devices, merchant wallets, in-app purchases, and recurring card-on-file payments,” said Sievert. Most institutions now support digital provisioning, enabling consumers to add their debit card to a digital wallet. But increasingly, issuers are also offering digital instant issuance, in which debit card credentials are pushed directly into the consumer’s digital wallet for immediate access. New customers, as well as existing ones with lost or stolen cards, benefit from being able to use their new payment credentials right away for online and in-person contactless purchases. In addition to improved customer satisfaction, the institution saves on the cost of rush-shipping new plastic cards. |
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Transaction experienceFraud – especially CNP fraud – continues to threaten cardholders and debit programs. It is critical to constantly evaluate and modify fraud models to minimize losses while not compromising a positive and seamless transaction experience. This involves balancing high authorization rates against low fraud losses. With CNP transactions continuing to take share from card-present (CP) purchases, issuer authorization rates are experiencing downward pressure. Participants in the 2024 Debit Issuer Study indicated that 81% of their declined transactions were CNP.
Optimizing your institution’s fraud-detection and risk-mitigation strategy requires evaluating your program with fraud analysts to refine rules, tools, and processes for CNP transactions. While this approach is particularly important for CNP activity, it applies to CP transactions as well. Your institution may already leverage fraud-detection solutions from your processor. However, utilizing multiple solutions from various partners - including your payment network – provides a layered approach to fraud prevention. DebitProtect® Authorization Blocking, offered by PULSE, is the most effective way to stop fraud on the PULSE Network. This service goes beyond identifying fraud threats, empowering you to stop fraud quickly through customized, real-time fraud-blocking rules and continuous evaluation of the cardholder experience. |
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Program performanceA key component of optimizing your debit program is prioritizing the key performance indicators: penetration, active, and usage (PAU) rates.
The 2024 Debit Issuer Study revealed that almost 84% of account holders have a debit card. Of these cardholders, nearly 74% are active card users. While the average institution sees a usage rate of 30.7 POS transactions per month, best-in-class institutions have active cardholders that make more than 32 transactions per month.
Prioritizing PAU management can help you increase debit transactions and spending, thus growing revenue for your institution. Issuers with best-in-class PAU performance offer instant digital issuance, support a smooth onboarding process, and execute lifecycle marketing strategies to drive usage. |
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Effective marketing underpins high performance
Sievert believes effective marketing can help support the creation of best-in-class debit programs. He offered the following recommendations.
Increasing penetration is Job No. 1
The average issuer has plenty of room for improvement in the most vital of the KPIs – penetration. A debit card should be issued automatically at the time of account opening for both consumer and commercial customers. Another way to boost the penetration rate is to highlight the convenience, security, and functionality of the debit card as part of your new account acquisition strategy. Lastly, analyze your existing account base to identify segments that do not have a card and conduct targeted outreach campaigns that educate account holders on the advantages of debit (e.g., easy access to funds, security features, digital wallets).
Prioritize card activation
When account holders open the envelope containing their debit card, the goal is to get them to activate the card immediately. The path to activation must be clear, simple, and frictionless.
In this digital-first age, offer the option of going online or to your mobile app to activate the card. Regardless of the path, ensure that activating the card and setting a PIN is the first interaction.
Onboard for top-of-wallet status
Once a consumer activates their card, have a plan to encourage use through onboarding emails. Focus your onboarding promotions on how your program’s features can solve cardholder problems.
Educate account holders on the benefits of using their new debit card. Give them a reason to keep your card top-of-wallet. If the card is contactless-enabled, talk about that. If it is compatible with popular digital wallets, tell them how to add it to their preferred wallet. Or, communicate the ease and convenience of card-on-file and recurring payments.
Focus your marketing messages
Keep marketing messages short by focusing on a single feature or benefit. Shorter, more frequent messages produce better results than less frequent, lengthier attempts. Also, segment your audience and tailor message frequency based on customer behavior, engagement levels, demographics, and preferences. For example, active users need fewer reminders than inactive ones.
Focus your efforts on portfolio segments that will deliver growth. Prioritize outreach to active cardholders and younger, tech-savvy generations.
Meet customers where they are
Should you use email, direct mail, or text messages? The answer is “Yes” to all, says Sievert. To communicate more frequently without inconveniencing cardholders, vary the channel. If you’ve been hesitant to try text marketing, rethink that.
SMS (short message service) marketing works. This type of text message has a 98% open rate, according to a September 2024 blog post from Textellent. The bottom line is to test and learn.
Positioning Your Institution for Success
Being cognizant of consumer trends, capitalizing on new digital payment demand, prioritizing effective fraud mitigation strategies, and working to refine your approach to PAU can position your institution to scale your debit portfolio and achieve best-in-class status.
For more information on debit program benchmarking, read our 2024 Debit Issuer Study white paper.