Friday, June 8, 2012
Cash or debit?
But most importantly, consumers have not only grown accustomed to using debit, but they also see value and utility in using the cards. In banks’ continued quest to translate paper and check payments to electronic payments, the debit card remains their strongest ally: According to proprietary survey results contained in our report, almost two in three engaged debit card users (those who use their cards at least once a month) use their debit card so that they can avoid carrying cash, half use their debit cards so they can avoid paying with cash, and almost 6 in 10 use a debit card because it is more convenient than cash.
The downside? We expect credit cards to siphon away a small share of transactions made by affluent, credit-worthy debit card users, and we expect emerging prepaid card programs to siphon off a significant portion of major banks’ least profitable checking account holders. But given longer term electronic payment trends, this will only serve to moderate debit card payment volume and transaction growth—not kill it.