The future of the debit card

July 11, 2019

Even with myriad payment options available, Americans are putting their bank-issued debit cards to use. Research conducted by Auriemma Consulting Group indicated year-over-year increases in debit card preference over the past two years, with 61% of consumers surveyed citing a debit card as their most frequently used card, up from 52% a year earlier. With no sign of slowing down, most financial institutions have reinvested in their debit portfolios, reissuing cards with EMV chip technology to adhere to the latest industry trends.

That’s where debit cards have been. But where are they going?

There’s no doubt that debit cards will remain a popular payment type. However, what the future holds in store for the debit card depends largely on how cardholders of the future are inclined to make transactions. Let’s take a look at two ways debit cards are already adapting to their cardholders’ changing preferences.

Taking control

Because debit cards directly access a cardholder’s bank account, maintaining control of funds is of the utmost importance. EMV has helped curtail in-store fraud, but hasn’t thwarted fraud in online payments and other card-not-present situations. The introduction of card controls that give cardholders a greater ability to track card use and monitor their spending has been effective in helping fight this type of fraud.

Advanced card control apps like MobiMoney, allow cardholders to manage their cards directly from their mobile device. Cardholders can elect to receive real-time transaction updates, notifying them of every purchase made on their debit card. Allowing cardholders to set spending limits, designate use locations and geographical parameters, and even require mobile device proximity can have a significant impact on their exposure and vulnerability to both card-present and card-not-present fraud.

But should their card be compromised, cardholders have the benefit of immediate, uninterrupted access to “turn off” their card, both limiting further damage to their account balance and the impact on their financial institution.

Going card-less

Removing the physical card from the payment equation might seem like the end of debit cards altogether. However, syncing smartphone technologies with the functionality of the debit card could just be the next step in its evolution.

In recent years, we’ve observed a slow shift towards NFC technology that supports the use of mobile wallets. By adopting mobile wallets, cardholders are transitioning their spending process and changing how merchants accept payments. As they begin using mobile wallets for their convenience, consumers are becoming increasingly comfortable marrying innovative payment technologies with sensitive personal information – provided that they feel their information is kept securely.

Contrary to some commonly held perceptions, mobile wallets are even more secure than EMV chip cards. Built-in security hurdles authenticate the user, which limits fraudulent use before the mobile wallet is even activated. Combining the extra securities of a fingerprint touch ID, six-digit passcode, and the device chip itself, smartphones offer strict user protections in addition to the standard PIN and signature components of debit card usage.

In addition to the advanced security measures of mobile payments, debit cards linked to mobile wallets like Apple Pay, Samsung Pay, and Google Wallet are advancing the convenience of store checkout. Prompting easy and instant payments, mobile wallets simply require a near touch to the merchant’s NFC-enabled point of sale terminal – a transaction more immediate than the exchange of cash. Payment receipts can also be sent and stored automatically to the device, removing the need and hassle of printing multiple customer receipts.

Ready for the future

By adding debit card information to mobile wallet applications on their mobile devices and using apps that monitor debit card usage, cardholders are finding innovative ways to transform the payment process, benefiting not only themselves, but merchants and their financial institutions, too. But just because cardholders are putting down the plastic in favor of newer electronic forms of payment, don’t be fooled into thinking that physical debit card payments will be left behind entirely. As long as consumers value the immediacy and flexibility of a debit payment option – whether in the form of physical card or mobile wallet – debit cards will continue to have a place in future transactions.