The Resilience of Debit and How Businesses Can Harness It

Debit cards have been around for decades, and although payment trends have shifted over time, the resilience of debit remains strong.

As a form of payment that is highly convenient, secure, and accessible to customers from all walks of life, it is no surprise that debit has become a staple in many businesses across the globe.

This article will explore the resilience of debit and how businesses can harness it to benefit their operations and bottom line.

Debit is Still a Customer Preference

Debit cards are still responsible for more than half of all card payments made in the U.S. But that’s not a headline, is it?

ChatGPT and other digital-first and online tools are constantly in the media, convincing us that “debit is dead” and “movies can be created without writers, actors, directors” but it’s important to remember: those things are always true somewhere, but they’re almost never true everywhere.

People still go to the movie theater. They still pay in cash. Sales of music records outpaced CD sales in recent years.

Just because the algorithms are boosting the latest and greatest tech tools doesn’t mean “tried and true” suddenly isn’t anymore.

In fact, in a 2022 Pulse Debit Issuer Study, consumer adoption of contactless cards is still slow – they are 70% of the issuance numbers, but only 6% of in-store payments. That is because traditional credit and debit payments are still many consumers’ preferred methods for subscriptions, bills, and many other purchases. These resilient payment methods may ebb and flow in popularity, but they aren’t likely to go away anytime soon.

As checks continue to age out and become less and less popular (though not altogether disappearing), debit cards get a small boost – the process is the same, the accounts in use are the same, but the debit card or ACH payment is just more efficient.

Debit may be seen as an older form of payment, but that doesn’t mean it’s time to let those payment processing options fall by the wayside. It just emphasizes the need for omnichannel payments. In the same way that people are choosing how to pay their bills and where to watch their favorite movies, they are also using multiple forms of payment to fulfill their bills and obligations, invest in new opportunities, save for the future, and splurge on self-care items.

Millennial and Gen Z Habits

It makes sense that payment method popularity rises and falls by generation and with different economic outlooks. But so far, the youngest adult generations – Millennials and Gen Z – are decreasing their reliance on cash and checks, but still lean heavily into the use of their credit and debit card accounts.

Generation Alpha (those born between 2010 and 2024) may likely cause another shift in the payment method used, but since the oldest in this generation are just reaching their teen years, it’ll still be a little while before we see another larger shift.

While the debit and credit usage mix shifts slightly every year, there is still consistent growth in these methods when you take a year-over-year usage approach.

Pandemic Findings

The COVID-19 pandemic created a unique environment for industries and economies all over the world, but it also tested the resilience of many of these day-to-day systems. And that includes the payment systems.

And card volume – the use of credit and debit cards – consistently rose during 2020-2021.

Building Resilient Payment Systems

Building resilient payment systems for your business can be done in many ways. But we wanted to share some of the powerful tips we recommend when it comes to incorporating direct debit processing and other important payment systems into your operations, both for your company’s employees and its customers.

Reconciliation and data control are hugely important, firstly. Real-time reporting is a necessity when it comes to processing transactions quickly and efficiently. As fraud incidents continue to rise, the more time you spend being unaware of what is going on in your accounts, the larger the impact your next incident will be. And businesses are already struggling with higher supply costs, inflation, labor shortages, and other industry-specific hurdles. No one wants to add fraud losses to that mix.

If you are auditing or building your payment system, it’s important to recognize and identify your specific business needs. Many banks and financial institutions will have restrictions or silos, so if you are looking for customized payment processing, you will need to define your needs when you reach out to a payment processing platform like ReliaFund so you can create an informed background for the processor to use when building out your system.

To get started, we’d recommend first identifying your core payment flows, reconciliation needs, and tracking features. A brick-and-mortar business will need different things than an online e-commerce store, and many businesses have a mix of both – they often have a physical presence somewhere, and a website or online storefront that helps reach customers not in your direct geographic area.

ReliaFund offers an end-to-end, user-friendly payment processing platform that can help you process and keep track of all your transactions, from debit to credit, ACH to echecks, recurring payments, and more.

Reach out to us today for an analysis.