Why You Are Losing Checking Revenues in the New Payments Ecosystem

Debit card transactions used to be the primary payment method when purchasing items in-store.  The boom in use of the debit card for in-store purchases as shown by the graph below drove record checking revenues in the first decade of this century.

I have some bad news and some good news.  The bad news is the payments world is rapidly changing for in-store and online purchases, and your checking debit card is losing out to prepaid and ACH payments.  Whether in-store or online, consumers now have a myriad of ways to pay that do not use the bank debit card:  PapPal, consumer prepaid card, in-store de-coupled debit card (e.g., Target Red Card, Cumberland Farms card), Retail reloadable card (Starbucks card), your cell phone (Dunkin’ Donuts mobile app).

Most of these methods settle to the bank checking account as a debit ACH and offer delayed payment alternatives such as BillMeLater, stealing all your revenue including interchange and NSF fees.  As a result, after a decade of winning growth, debit card activity is shifting away to these alternatives.  Bank checking revenue is down 20% from 2009 and not growing accord to the FDIC.

Now the good news.  You can win payments back and grow revenues if you will simply offer “payments” features with your checking account.   The three main “payments” drivers of the growing shift away from checking account debit cards are:  1) the consumer desire for certainty in avoiding overdraft fees,  2) the desire for greater security for online and in-store shopping,  3) simpler and quicker credit for delaying the payment for purchases offered by others.  

The PaySound^® Checking Plan and Companion Card delivers exactly these features to grow revenues from existing customers and drive account acquisition.