The speedy recovery of the debit market early in the pandemic is gaining strength. It continues to grow worldwide as the amount spent with debit has exceeded credit (2021 Debit Issuer Study). What’s fueling the popularity of debit cards and what does it mean for credit unions?
Changes in Consumer Behaviors
Shifts in spending patterns made during the pandemic are becoming habit for many. Consumers are enjoying the convenience of using debit cards over cash while keeping their budgets under control.
The 2021 Debit Issuer Study shows the continued popularity of debit can be attributed to consumers increasing use of this payment method for:
- Account-to-Account Transfers
- Contactless Payments
- Mobile Wallets
These findings show that much of the continued growth of the debit market results from consumers becoming more comfortable using debit for digital-based transactions.
The Demographics Driving Debit Use
The current market patterns, not surprisingly, match the outlook and needs of the dominant consumer group –Millennials. They make up a fourth of America’s population and have the largest disposable income at $1.4 trillion. (Capital Counselor). Historically, debit tends to be utilized most during recessions that interrupt consumers’ normal spending behaviors, but Millennials, and even Gen Z, are consistently more budget-conscious than other generations. These consumers are also more comfortable with digital payment methods. A JD Power study shows younger consumers satisfaction with digital payment methods like mobile wallets about equals their satisfaction with physical cards. These outlooks and characteristics of younger and upcoming consumers suggest debit will remain a relevant payment method well into the future.
Why These Trends Matter for Credit Unions
Debit cards are clearly an important part of both a credit union’s portfolio and member relationships. Already, debit has become an increasing source of potential income. Debit went from representing 25% of non-interest income for exempt issuers in 2019 to 33% in 2020 (PULSE). Debit also presents an opportunity to serve the underserved and help members feel financially confident. Many younger consumers like Millennials are making financial health top priority and a debit program through your credit union can help them feel more financially empowered.
At Envisant, we’re here to help you develop a strong, relevant debit strategy that fits the priorities of your credit union and its members. To learn more about the Envisant difference and get started, contact us at 1-800-942-7124.