TAMPA, Fla.–A recent FIS consumer survey indicates it may not take a great deal of CU effort to encourage a sizeable portion of members to swipe their debit and credit cards more often.
The study, which shows that debit and credit usage is on the rise–60% of consumers today use electronic payments compared with 45% less than two years ago–indicates a big opportunity exists to easily convert check and cash users to debit and credit.
The report, titled “Accelerating Paper Check Migration,” also shares consumer insights into what it would take to increase debit and credit usage from those who are already heavy users of electronic payment options, and that CUs are guilty of not educating members well on all the benefits of debit and credit.
Immediate Gratification Is Key
Bill Lehman, VP of portfolio consulting for CSCU, shared that summary, as well as some other key findings. “Of those respondents who said they preferred debit, 62% said they place importance on controlling and tracking their finances as their top reasons for using debit,” said Lehman. “They like seeing their transactions immediately on their mobile device or at home online, like being able to categorize expenses, and are realizing electronic payments offer these capabilities.”
As a result, Lehman said CUs should make sure they bundle for debit users services that offer convenience, such as mobile banking platforms to make it easy for members to monitor their transactions. Lehman also noted consumers’ desire for debit rewards is growing.
Of the respondents who said they use credit most often, 64% say rewards are very important, explained Lehman. The group, too, placed emphasis on being able to carry balances.
“Credit union credit cards need to offer rewards. So members prefer debit for tracking their financials but gravitate to credit for rewards and revolving capability. We are starting to see these electronic payment vehicles are reaching very distinct types of people.”
But Lehman pointed out the study shows that 27% of respondents indicated they preferred cash and 11% like to write checks. “There is 38% of the membership using cash and checks and now is a great time to migrate those people to credit or debit.”
That effort may not be difficult, according to the study, as Lehman pointed out. “The check writers are saying they track their spending by using checks. Well, 30% of the check writers say they’d write fewer checks if they could track their spending with a different payment vehicle. And a bigger number, 43% of check writers, say they write a check just because of habit.”
Lehman said that finding indicates a breakdown in credit unions communicating to members the benefits and features of electronic payments. “We have to capitalize on all the capabilities of electronic payments to convert some of these check writers.”
While credit unions, largely, hold the line on free checking, Lehman said it might not be a bad idea to institute a 10-cent per-check charge. “That’s not a lot of money to charge, and is an important number because 30% of the check writers in the study say they would write fewer checks if they were charged 10 cents per check. Also, 24% of check writers said they would switch more to credit or debit for rewards.”
What the study reveals to credit unions, according to Lehman, is that credit unions need to regularly reinforce to members the benefits of debit and credit programs. “Credit unions have a good portion of their membership they could switch from checks to electronic payments, and many may not know how easy this can be.”