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July 16, 2010

  • News:  Debit Card Programs Not Up To Par

    As more and more credit cardholders switch to debit card usage, lenders have begun to focus on customer service issues with debit card holders. A new study conducted by First Data Corporation, indicates that overall credit cardholders are not satisfied with the service provided by their debit card bank. The report, Worldwide Opportunities for Debit takes a closer look at the debit card industry and the level of performance by the banks. First Data, a global leader in the electronic payment processing business, contracted TowerGroup to conduct the study which involved interviewing 34 banks from around the world including Australia, Brazil, Germany, Greece, India, Mexico, Poland, Turkey, United Kingdom and the United States. Overall, the report shows that if banks want credit cardholders to use their debit card systems, they will need to do a better job at developing the program.

    According to Paul Stanley, Senior Vice President Financial Services, EMEA for First Data, said that if banks are to "capitalize" on the credit cardholder's switch from credit to debit, they will need to "develop a sophisticated understanding of the economics" of the programs they offer. That means being more technology savvy. Stanley also had a word of caution that the same issues that have faced the industry with regard to credit card fraud and new legislation could add an increased element of concern. Worldwide Opportunities for Debit suggests banks should take a closer look at their growth strategies to make them more conducive to the growing need for debit card service.

    First Data reports that the debit card market is very unbalanced at this time with 10 percent usage in some areas and as much as 80 percent in others. The company suggests that banks should collaborate with retailers to develop programs that will be more inviting to credit cardholders looking to increase debit card usage. Some suggestions include mobile, prepaid, contactless and e-commerce; all markets that have been empowered by the youth. If the banks want to be active participants in the debit card market, they will need to increase product development and increase their focus on new technology. Despite these warnings, most experts feel that the debit card market is here to stay and the real issue is who will beat who to the finish line.

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