Top 10 Debit Win List

By Greg Borchard, Visa Inc.

Issuers often ask, “With so much to do and so little time to do it what should I focus on to increase consumer debit sales volume and revenue?” My answer, outlined in the Top 10 list below suggests strategies to help community banks maximize their debit portfolio success:

Benchmark your portfolio. Use the Visa Consumer Debit Products Peer Group Scorecard – available at Visa Online www.visaonline.com – to determine your portfolio strengths and opportunities and compare penetration, activation and usage (PAU) figures to the Visa System average and then focus resources on underperforming areas.

Quantify your portfolio opportunities. Visa has developed Performance Measurement Calculators (which include a PAU Sensitivity Model) that can help quantify PAU improvements, the slightest increase of which could have a significant impact on your bottom line. Focus your resources on the areas of greatest opportunity. The model is available at no charge on Visa Online or through ICBA Bancard.

Evaluate and implement quick-win opportunities. If your portfolio is under-penetrated, for example, consider an ATM card or DDA-only account upgrade to debit. Position the new card as a superior product and use the card carrier (the highest read piece of collateral cardholders receive) as a marketing vehicle. Include activation and usage offers and/or information about your debit rewards program, if applicable. The earlier an individual begins using the card, the more likely the person will become an entrenched debit user, research shows.

Evaluate your online PoS network strategy. Oftentimes consolidating networks can save money which is why some issuers have only one online POS network on their cards. This strategy can help issuers achieve discounts by reaching higher volume tiers and simplifying operational procedures. Interchange rates have also changed, warranting an evaluation from a net revenue per transaction basis. Quantify the net revenue and strategic advantages of each of the bank’s networks and choose networks carefully.

Reinforce the benefits of debit over cash and checks. Debit is convenient, provides budgeting and spending control, and also offers important consumer protections that cash and checks don’t have. Plus a cardholder has the opportunity to earn rewards if your community bank offers this program—all benefits of the card that should be promoted.

Focus on non-discretionary spend segment growth in 2010. In a challenging environment, most non-discretionary debit spend segments (with the exception of gas) experienced strong growth in 2009¹. Encourage usage in these segments which include supermarkets, quick-service restaurants, healthcare, bill payments, discount stores and drug stores.

Incorporate best practices into every initiative. Visa has a number of best practice guides to help maximize your debit portfolio. Several of my favorites include the Branch Originations Best Practices Study, Visa Debit Best Practices and our recently completed, Best Practices for Insufficient Funds Responses to Improve Authorization Approval Rates. Review these materials; available on Visa Online or through ICBA Bancard for free.

Focus on initiatives that build annuity-like usage. Offering a debit rewards program is a great way to encourage activation and usage as well as influence cardholder behavior. It’s also an increasingly important consideration in developing a competitive debit product. Promoting bill payments for recurring payments such as a telephone or cable bill, insurance premiums, or gym memberships is another great way to build annuity-like usage. Here too a rewards program can help motivate cardholders to sign up for such recurring payments and pay with their debit card.

Evaluate your authorization approval rate. Recent changes to Regulation E – effective in July – will affect issuers’ ability to charge fees for overdrafts and will impact debit transactions for cardholders and issuers. Recently, Visa conducted a Best Practices for Insufficient Funds Responses to Improve Authorization Approval Rates study to assess key strategies and practices that impact NSF declines and overdrafts for Visa Debit issuers. The study identified 16 best practices to help improve authorization approval rates and is available for free.

Use a marketing lifecycle approach to increase PAU. The new Visa Debit Marketing Resource Guide – available on Visa Online – is another great resource to help develop and implement your debit marketing campaigns. The guide contains lifecycle marketing best practices, consumer debit branch best practices, and tactics by audience and channel. Consider developing an EMOB (early months on book) program for new cardholders to increase engagement. And the new Visa Debit Card Best Practices provides the latest Visa intelligence on lifecycle marketing. Again, these materials are available at no cost on Visa Online.

There you have it…my Consumer Debit “Top 10” Quick Win list for 2010.  I hope you have found this helpful and want to wish each ICBA Bancard client success in the year ahead.

Greg Borchardt is senior business leader at Visa Inc.
¹Visa Debit Business Update Quarterly Statistics – December 31, 2009.

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