Consumers are becoming more comfortable with emerging technologies for making payments as these tools become more reliable and convenient. The desire for contactless payment options and the potential cost savings is driving an increase in decoupled debit cards, which are issued and operated by entities other than traditional banks or credit unions.
Many of the fees and rules that come with debit products issued by traditional financial institutions (FIs) do not apply to decoupled cards, making them a desirable proposition. The absence of interchange fees charged by issuing banks can also represent cost savings for retailers, and it may even be the deciding factor in determining whether smaller retailers can afford to accept card payments.
In the January edition of Next Generation Flow Tracker®, PYMNTS explores the growing use of contactless debit, the use of decoupled branded debit cards linked to customers’ checking or savings accounts, and loyalty programs that can incentivize them to spend more.
Around the Next Generation Debit Space
Financial institutions and retailers are building partnerships that can help them better target debit-based offers to young, tech-savvy consumers, enabling merchants to meet the needs of more than 20 million potential customers in the teenage market and Gen Z. As a result, some digital payment companies have lowered age limits to unleash the purchasing power of this growing demographic.
Meanwhile, restaurant point-of-sale (POS) platform Toast announced a suite of new products to improve how restaurant owners receive money, manage operations, and pay and tip employees. The new products aim to help restaurant workers avoid late fees, overdraft fees or high-interest payday loans by giving them faster access to their wages. Daily payments, rather than long waits for paychecks, can help recruit workers from restaurants that can’t offer higher wages.
To learn more about these stories, visit Tracker’s News & Trends section.
Runninga and give customers the means to disconnect from their traditional bank card
Historically, the big banks have cornered the debit market and may have been the only saloon in town to issue cards paired with bank accounts. The rise of open banking and the proliferation of third-party FIs are changing the market, making it easier than ever for merchants and non-financial organizations to put their name on a debit card linked to a customer’s bank account.
In this month’s report, James Lynn, co-founder of British FinTech company Currensea, explains how the company’s decoupled travel debit card is helping customers eliminate high interchange fees and retain customers. major banks while helping to save the environment and giving businesses the ability to connect with customers who demand more choice.
In-depth analysis: The rise of decoupled debit and the potential impact of interchange fees
Uncoupled debit cards, which are issued and operated by merchants or organizations and linked directly to a customer’s bank, are becoming increasingly popular. This shift is driven by the growth of open banking, making it easier to escape the clutches of big banks that charge high interchange and membership fees in favor of branded cards that save consumers money. money and increase marketing opportunities for businesses and organizations.
A recent report revealed that debit purchases in October 2021 increased by 35% compared to OcOctober 2019. Of these sales, cardless transactions accounted for 42% of this activity, and financially confident consumers are looking for ways to pay for their purchases electronically while giving up their loyalty to their bank.
This month’s Deep Dive examines the growing popularity of decoupled debit cards and how companies are looking to find safe and convenient ways to eliminate the middleman from the equation, especially for consumers demanding the convenience of contactless debit options that don’t want to be tied to traditional FIs.
the Next Generation Flow Tracker®, a PYMNTS and IMPULSE collaboration, examines how consumer spending preferences are changing, particularly around debit and contactless payments, and how banks and retailers are making it easier for consumers to leave the card at home.