Despite the rise of digital wallets, debit cards remain consumers’ preferred payment option


Consumers continue to be enthusiastic about using digital wallets for payments. But new data shows that even as those numbers are rising, physical charge cards still dominate overall utilization and customer satisfaction.

Still, the trend is clear: digital wallets are on the rise, and within wallets, debit cards are starting to lose their branding.

The JD Power 2024 Financial Cards Satisfaction Study shows that more than 70% of customers surveyed said they use their financial cards at the point of sale, either in person, by swiping the card or by entering their account number online or on a mobile app.

This is higher than all other payment methods, including cash, credit cards and digital wallets. The survey results show that compared with other payment methods such as credit cards, digital wallets and buy now pay later (BNPL), debit cards also have the highest proportion of customers who have a favorable opinion of this payment method (68%). The survey was conducted between September and November 2023, with a total of 7,756 responses received.

Customers under 40 remain the most likely users of debit cards (82%) and the most likely to have a favorable opinion of debit cards (77%). Debit card providers that perform particularly well among people under 40 include Capital One, Chase and US Bank, according to the report.

“Consumers have many choices when it comes to payment methods, but they prefer debit cards to most other payment methods,” said Sean Gelles, senior director of payment intelligence at JD Power.

“Our latest research shows that point-of-sale usage is down 6 percentage points compared to the previous year, but this does not necessarily mean less debit card spending by issuers given their place in digital wallets. increasingly prominent,” Gelles added.

Reimagining value-added services for debit cards

Given this trend, analysts do expect to see less use of physical cards and less manual entry of account numbers in the future as the use of digital wallets becomes more common.

The more pressing issue facing debit card issuers is how to maintain brand image when debit cards are increasingly hidden behind digital wallet branding in the point-of-sale payment experience.

The risk for card issuers is that as more shoppers tie transactions to tech-enabled wallet providers such as Apple rather than the card issuer, customer affinity for their brands could take a hit. Consumers tend to associate their perceived ease of use and positive connotations with the technology behind their wallets rather than their debit cards.

“If they can't resolve this issue, the issuer could be in trouble,” Gelles said.

JD Power reports that card issuers must find new ways to make themselves integral to their customers, possibly focusing on value-added experiences related to budgeting, security or rewards, all of which, if delivered well, can be valuable to debit card users have a significant impact on satisfaction.

For example, Early Warning's new Paze digital wallet represents a strategy to overcome challenges and enable participating debit card issuing banks to retain brand relevance and customer relationships within the digital wallet ecosystem.

Issuers that offer Paze and encourage their active debit card users to sign up should benefit most from the combination of ongoing spending and brand recognition.

Top issuers score high on fees and security

Meanwhile, there are other differences between charge cards that influence how consumers respond. Cost and safety were the two largest contributors to widespread satisfaction with the results.

It's worth noting that there's an 85-point gap out of 1,000 between the top and bottom debit card issuers. Scores are most affected by customer opinions about the reasonableness of fees and service charges and purchase limits.

Security is also crucial for debit card users. Issuers' overall performance will see the biggest boost if their customers say they keep them fully informed about security policies/protections. BMO, Capital One, Citi and Huntington all posted strong results on the security front, according to JD Power's findings.

Rachel Koning Beals is a senior editor at BAI.



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