Debit Cards: A historical perspective – What you need to know and why!

In spite of all the recent publicity regarding compromises and the concerns over card security and identity theft, the use of debit and credit cards has never been more prevalent. In fact, while most of us have been using debit cards for years, we are in the midst of a cultural shift when it comes to this payment method. Why? Let’s examine the history of debit cards.

For most of the adult population, we can recall a time when we would write checks to pay our bills, cash to buy everyday items, credit cards for large purchases, and ATM cards to access cash. These ATM cards could only be used at certain ATM locations and not at merchant locations. By all accounts, this was the case for the majority of us prior to the early 1990’s. Since then, the old “ATM” card has undergone a complete facelift and the payments industry has experienced a seismic shift in how we conduct our daily affairs. So why is this important to us?

The young adults of today have grown up in the world of debit cards. Their use of cash—and for that matter, credit cards—is very different than previous generations. A recent study conducted by the American Consumer Credit Counseling (ACCC) shows that 80 percent of Americans use their debit card for everyday purchases. This may not seem all that surprising until you hear that an astounding 100 percent of 18-24-year-olds use their debit card for everyday purchases. Additionally, 69 percent of respondents now say that they use their debit card when shopping for special occasions such as holidays, back to school, etc.

So what should we do?

Credit unions need to embrace this new environment and recognize that not only are debit cards here to stay, they are now the primary payment method used by our young adults. Strategies and promotions should be developed to support debit card usage, to differentiate our brand from the bank down the street, and to embrace the future or payments. For many credit unions, this may mean relying on external resources to provide some of the expertise necessary to accomplish these goals. LEVERAGE’s debit solution allows credit unions to take advantage of one of the premier debit networks while also providing the necessary marketing tools to build various campaigns based on the member segmentation analysis.