DEBIT CARD REWARDS – RE-BOOT?

There is enough consumer interest in debit card rewards to warrant providers taking a second look at this marketing strategy, according to a recent survey by SYNERGISTICS Research entitled, Debit Cards: Strategies and Tactics.  Currently few debit card holders – one-third – earn discounts, rewards, or rebates for their debit card activity.  Three in ten of those earning rewards pay a fee to do so.  One in eight indicate annual fees; one in six pay monthly fees. Among those debit card holders not earning rewards, three-fourths express interest in a debit card reward program.  Somewhat more than four in ten would be “very” interested.  Interest is widest among 18- to 34-year-olds.  Of those expressing interest, almost four in ten are willing to pay an annual fee of at least $20 for a debit card reward program, including one in eight who would pay $50.

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William H. McCracken, CEO of SYNERGISTICS, stated, “In the face of increasing economic and regulatory pressures – along with the reduction in interchange income for some debit card issuers – debit card reward programs, for the most part, have been de-emphasized or even discontinued by most financial institutions that were involved with them.  However, debit card rewards are a relationship tactic that is appropriate for some markets and customer segments.  Providers should consider debit card rewards as a value-added, fee-based relationship tactic, particularly focused on that younger segment of the market who is most receptive to these programs.  Presenting a clear proposition – that is, a reward program that is easily understood and provides definite value – is essential.”

These are among the findings from SYNERGISTICS study, Debit Cards: Strategies and Tactics, featuring 1,003 national Internet interviews with consumers age 18 or older.  This study examines consumer usage of and reaction to debit card programs, including pricing, rewards, special services and product innovations.  Security and privacy issues are also evaluated. Results will be presented to clients during a teleconference on June 15, 2015, at 2 p.m. (EST).

SMALL BUSINESSES AND CHECKING – MIXING BUSINESS WITH PERSONAL

Some small businesses are mixing business and personal checking, according to a recent survey by SYNERGISTICS Research entitled, Evaluating the Personal Financial Behavior of Small Businesses.  The large majority of small businesses that have checking accounts (81%) were asked detailed questions to determine the exact type of account being used for their business.  Most, eight in ten, report they do use a business checking account only for business purposes.  Another one-tenth report that they have a business account they use for both business and personal purposes.  About one in twenty checking holders say a personal checking account is used for both business and personal purposes.  This is wider among respondents in low-volume firms, those in service industries, and those with a small number of employees.  A very small number – 3% – use a personal checking account only for business purposes, a finding again more widespread among low-volume firms. Overall, about one-tenth are found to be using personal checking accounts for business purposes.

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Genie M. Driskill, COO of SYNERGISTICS, stated, “Checking accounts are the cornerstone of small business relationships.  Overall, usage of business checking accounts is widespread among small businesses.  However, there are a number of ‘mixed-use’ situations that may represent marketing opportunities for providers to ‘tighten up’ their small business checking customer base.  Overall, about one-tenth of the small business checking market in some way is using personal accounts for business purposes, which tends to be concentrated among lower volume firms.  Moving these customers to business checking should certainly be a priority for providers.  Conversely, the other one-tenth who indicate they are using their business accounts for some personal purposes may represent a cross-selling opportunity for more suitable household checking accounts.”

These are among the findings from SYNERGISTICS study, Evaluating the Personal Financial Behavior of Small Businesses, featuring online interviews with 616 owners and executives of small businesses with annual sales of $50K-$5M. Industry categories include manufacturing, wholesale, retail, and services.  This study examines the business and personal financial usage profile of small business owners.  It explores issues concerning the selection process for financial accounts and providers, cross-selling, relationship managers, and channel usage.