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Data for today’s episode is provided by Mercator Advisory Group’s report – Debit Card Abruptly Finds Itself Top of Wallet
Consumers Are Favoring a Single Card:
- As consumer interest in credit cards has been in decline, debit cards are the likely destination.
- Interestingly, consumer flight from credit began in 2018-2019 resulting in increased debit, cash, and prepaid usage.
- Not only are consumers switching payment methods: consumers are consolidating to a single preferred payment method.
- The battle is on for top-of-wallet: now credit cards have to compete with fellow credit rewards programs and debit cards in general.
- The debit vs. credit battle will be held over the intrinsic value of the card schemes, as debit cards rarely have a rewards program…
- …Or do they? A top Mercator recommendation for debit issuers is offering cash back rewards to debit users, likely to make their card the single preferred.
In the continuing cycle of firsts and “unprecedented” events experienced during the global pandemic and the associated economic recession of 2020, the U.S. card market is currently experiencing a first of its own. Mastercard and Visa debit card transactions and dollar volumes are greater than those conducted on credit cards as explored in a new report, Debit Card Abruptly Finds Itself Top of Wallet. As consumers stare down potentially months of necessary household spending restrictions, they are relying on their debit cards much more, putting issuers in a new operating environment.
“We anticipate that changes in consumers’ payment habits, largely driven by the COVID-19 pandemic, are likely to continue long term, if not become permanent routines. While the credit card market is being challenged, debit cards are now at an advantage and debit issuers will want to take steps to insure they retain this position,” comments Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group and author of the report.