Role in the Payments Mix

Rewards and Enhancements

Fraud and Security Issues

Key Finding from a Previous Phoenix Synergistics Report:

In the 2015 Phoenix Synergistics survey, Debit Cards: Strategies and Tactics, findings revealed that most see debit cards as a replacement for cash and checks.  Few see debit cards as a credit card replacement.  Has this perception changed in the last few years.

Research Description and methodology

This study examines the consumer perspective on debit cards and their role in the payment mix. Issues concerning rewards, enhancements, and security are assessed.

National Internet Survey – The survey features 1,500 online interviews with consumers age 18 or older.

Key Dates

October 27, 2017 – Final acceptance of client comments on the questionnaire.

October 27, 2017 – Charter fee date.

December 2017– Initial results available.

January 2018 – Project Report available.

Strategic Objectives

  • Assess changes in debit card activity. Identify reasons for which consumers have increased or decreased their usage of debit cards. Determine if debit cards are preferred over credit cards for some purchases.
  • Determine the extent to which customers’ privacy and security concerns are impacting debit card behavior. Identify types of fraud or identity theft occurrences consumers have experienced. Evaluate reaction to an “on/off switch” for debit cards.
  • Assess the state of debit card reward programs. Measure the extent to which debit card users are receiving rewards. Determine the perceived advantages and disadvantages of rewards.  Assess the fee income potential for reward programs.
  • Evaluate how technological advances affect how consumers use their debit cards. Examine experience with mobile payments, mobile ATM access, and P2P payments. Gauge consumer reaction to the implementation of chip enabled/EMV debit cards.
  • Examine the position of debit cards against credit cards. Identify the motivations that drive the preference for one card over another.  Gauge the impact of a combined rewards program.
  • Examine the perceptions of nonusers of debit cards. Determine if user attrition is a factor in the market. Evaluate the potential for targeting  ex-users and nonusers to expand the user base.
  • Profile and segment the debit card user base for marketing efforts.  Determine which demographic traits or behavioral variables are most effective for targeting advertising  or marketing communications.

Research Issues

  • Debit cards have become one of the most popular and widely used payment methods out there – alongside credit cards, cash, checks, and various online and mobile payment innovations. In addition, new non-traditional payment providers are beginning to offer their own debit products. So the question becomes what role does the debit card product play in today’s diverse payments market?  Has the increasing popularity of debit cards impacted other payment methods or do new methods threaten to disrupt the debit card’s strong track record?
  • In this evolving payments environment, providers continue to re-work and upgrade the debit card with value-added services such as identity theft insurance, credit report monitoring, and price protection to name just a few.  Some issuers continue to offer debit card reward programs that offer airline rewards, cash rebates, merchandise points, and charitable donations.  Issuers may implement debit card reward programs and value-added services to help debit cards compete or combine with other card products.  Allowing customers to personalize debit cards with custom pictures can provide incremental revenue.  Providers continue to evaluate instant-issue programs that put debit cards in the hands of customers on the spot when checking accounts are opened at the branch.
  • Unfortunately, the increased usage of debit cards has made them more vulnerable to being targets for fraud.  In response, some providers have added an on/off switch to their debit card products in the form of a mobile app.  EMV implementation is moving along and issuers are adding chips to their debit card products.  What is the consumer response to chip debit?  In the dynamic payments market, knowing the consumer perspective is essential to designing and optimizing debit card strategies.


Cash, Checks, and Cards

Online and Mobile Payments

New Competitors

Key Finding from Previous SYNERGISTICS Research Surveys:

Based on findings from previous SYNERGISTICS surveys, it becomes evident that consumer usage of online PC bill payment has experienced incredible growth over the past decade and has now stabilized.  Are there opportunities for further growth.

Prop Graphic

Highlights of the Study

This study examines consumer payment behavior at the point of sale and online, as well as for bill payment. Current usage of various payment methods and consumer reaction to innovative payment options and technology are assessed.


National Internet Survey – The survey will include 1,000 Internet interviews with consumers age 18 or older.

Key Dates

September 23, 2016 – Charter fee/Intro pricing ends.

September 23, 2016 – Final acceptance of comments on questionnaire.

December 2016 – Project Report available.

Strategic Questions

  • How do consumers approach the wide array of options that exist for making payments and transactions? What are the preferences and relative share of activity for cash, checks, debit cards, credit cards, and prepaid cards? What perceived benefits and drawbacks do consumers associate with various payment methods?
  • Do consumers’ payment preferences vary among different point-of-sale locations? Does cash still hold a primary position for certain locations or purposes?  Can these preferences be shifted with new payment options or technology?
  • What is the overall profile of consumers’ bill payment behavior? Is bill payment via mobile phones and tablets displacing some PC-based activity?   How can financial institutions react to preferences for biller sites/apps vs. FI sites/apps?
  • What are consumers’ payment preferences for online purchases and transactions? Does this vary with type of transaction?  Have alternative payment options – such as PayPal Credit, Visa Checkout, or MasterPass – captured a significant share of this activity?
  • How are developments in payment technology – such as mobile payments at the point of sale, mobile person-to-person payments, and mobile card readers – impacting consumers’ payment behavior? Do consumers’ perceptions of the implementation of chip card (EMV) technology require a response from providers?
  • Which payment methods or options do consumers see as most – and least – secure against fraud and misuse?  How should providers respond to these perceptions?
  • Which customer identifiers – such as household demographics, attitudes, or current payment choices and behavior – are useful in evaluating the potential for new payment methods and options?  How should customers committed to traditional payment options – particularly checks and cash – be marketed to?

Research Issues

  • The consumer payments market continues to evolve as numerous innovations in technology and payment alternatives are introduced.  The adoption of EMV standards – chip cards – in the United States in response to widening concerns over payment security is one of the more significant developments in recent years.  Concurrent with this is the ongoing progress toward a digital wallet – a concept discussed for a decade or more but never quite realized.  The introduction of Apple Pay, Google Wallet, and similar options represent a significant “leap” in this area.  The eventual impact of these developments on contactless card products is a question of great interest among issuers, processors, and merchants.
  • At the same time, traditional payment options still have a role in consumers’ payment behavior.  Both industry and government data show that check writing frequency is declining.  However, previous findings by SYNERGISTICS suggest that there will be segments and purposes wedded to check writing for some time to come.  Similarly, recent data from the Federal Reserve indicate that the usage of cash for small value payments at the point of sale is far from dead, despite long enduring proclamations to the contrary from industry observers.  In addition, credit cards and debit cards are widely used and popular forms of payment.  Prepaid cards have found a particular niche for certain types of everyday expenses.
  • The emergence of third parties – such as telecommunications companies, Internet content providers, and P2P organizations – may pose a challenge to the traditional dominance held by banks in the payments area.  This study examines the scope of consumer payment behavior. [F248]


Upscale Rewards; Enhanced Services

Revenue Potential

Marketing Strategies

Key Finding from the SYNERGISTICS Report:

Results reveal notable near-term potential for premium cards in the higher income market, with potential being particularly strong among those with income of $400K+.

A90 Prop Graphic

Highlights of the Study

This study examines consumer experience with premium credit cards.  Consumer reaction to upscale rewards, enhanced services, and pricing is also assessed.

National Internet Survey – 750 consumers age 18 or older with household income of $100K+.

Key Dates

September 2016 – Project Report available.

Strategic Questions

  • What is the overall environment for consumer usage of premium credit cards – including such aspects as number of cards used, monthly frequency of transactions, and charge volume?
  • Are there certain features or services that, from the consumer perspective, distinguish premium cards from other credit cards?  Do factors such as pricing, types of rewards, special services, credit line, and co-branding affiliation influence the perception of premium or prestige card status?
  • How strong is the potential for premium or prestige cards in the next year?  What features or services are considered “ideal” for such a card?
  • How large is the revenue potential for premium card programs?  To what extent do current premium card users pay annual fees?  How willing are prospects to pay fees for a premium card with the features and benefits they value?
  • What are the motivations – such as rewards, larger lines of credit, or distinctive appearances – for obtaining a premium card?  How widespread is usage of upscale services such as concierge, airport club access, travel upgrades, and special event tickets and are these services valued – particularly in terms of paying fees?
  • By what channels did users of premium cards get product information prior to obtaining a card?  Which channels were used for applying for an account?
  •  Can the premium card market be segmented on the basis of demographic traits, financial behavior, or consumer attitudes?  Which may be best to identify potential new adopters?

Research Issues

  • Whether gold, platinum, or titanium, premium credit cards remain popular among affluent consumers and frequent travelers. Competition is intense as card issuers scramble to stand out in the premium card market. These premium or prestige cards are attractive products for providers to offer and in most cases can provide guaranteed revenue from annual fees.
  • However, consumers are now beginning to look more closely at the premium card offerings to determine if the high-end features and services offered are worth the price.  The strongest competition among issuers tends to be in the realm of travel-related features and services and consumers are now gravitating toward those cards that can offer the greatest return in terms of travel-related rewards and benefits.
  • Marketing premium or prestige card offerings can be a challenge as card programs need to be fresh and unique, especially for the more affluent consumer. SYNERGISTICS survey will examine the features or benefits upscale consumers consider to be premium level, the marketing strategies necessary to attract these consumers to a particular card, and the revenue opportunities that exist for card issuers. [A90]


Product Line Strategies

Specialized Rewards and Services

Account Management

Key Finding from the Report:

Results from SYNERGISTICS 2014 study, Opportunities in the Small Business Card Market, revealed that a majority of small businesses would value the ability to customize the look of their business credit cards.  Would these companies pay a fee for this specialized service?

F247 Prop Graphic

Highlights of the Study

This study examines small business usage of business credit and debit cards, as well as reaction to reward programs, value-added card services, and account management options.


National Internet Survey – The survey will include 600 small business owners/executives – 150 in the following sales volume categories – $50K-$99.9K, $100K-$499.9K, $500K-$999.9K, and $1M-$5M.  Industry categories include manufacturing, wholesale, retail, and services.

Key Dates

August 19, 2016 – Charter fee/Intro pricing ends.

August 19, 2016 – Final acceptance of comments on questionnaire.

November 2016 – Project Report available.

Strategic Questions

  • What is the share of market among small businesses between usage of business or corporate credit cards and personal credit cards used for business purposes? What are the reasons or motivations for using personal credit cards?  Is there potential for expansion of business or corporate card usage – including conversion of personal card users?
  • How widespread is participation in reward programs among business/corporate card users? Which types of rewards are seen as most valuable?  Are small businesses willing to pay fees to have credit card rewards?
  • Are premium and prestige credit cards an appropriate product for the small business market? What upscale features and benefits have the most appeal?  Is there fee revenue potential for this product?
  • How are small businesses using debit cards? How does this activity differ from credit cards in terms of frequency, volume, and purposes?  For what criteria or reasons would a debit card be used instead of a credit card?  Is there any growth potential for the business debit card market?
  • What is the overall role of credit in small businesses’ credit card activity?  To what extent have users obtained a card because it has a large credit line?  Is using cards as a credit line to finance major business expenditures a major purpose?  Are small business credit cards used as substitutes for other credit products?
  • What are the trends and dynamics for online account management among small business/corporate card users? Are mobile and tablet applications becoming widely used?  Can activity be expanded by promoting certain activities or applications?
  • What traits, characteristics, or identifiers are useful in segmenting and targeting the small business card market?  Are behavioral variables – such as monthly card frequency or volume – useful for designing and implementing strategies and tactics?

Research Issues

  • It seems the small business card market becomes increasingly more competitive and complex with each passing year.  Providers aggressively compete for a share of this market including credit cards and debit cards.  How do these card products fit together in a card product line?  Should they be promoted individually or as a combined payments solution?  Many of the current strategies in the small business card space have been adapted from the consumer market.  Rewards – including travel discounts, airline miles, cash back rewards, and merchandise points – are key features, as well as extra services such as purchase protection and travel and emergency services.  Are there particular business-oriented rewards that have appeal to small businesses?
  • Many issuers also promote premium or prestige business credit cards, which have the added benefit of fee revenue.  Usage of business debit cards is growing, but still lags behind usage in the consumer market.  How can providers spur increased business debit usage?
  • Account management is an important aspect of any card program.  What account management features are most needed by small businesses?  The exploding popularity of the mobile channel has unleashed a variety of potential applications for small businesses – from account access and alerts to point-of-sale applications.  To what extent are these new mobile services being adopted by small businesses?  It is essential for issuers to have a clear understanding of the card market from the small business owner’s perspective.  This study examines small business usage of business credit and debit cards, as well as reaction to reward programs, account management options, specialized services, and mobile apps and innovations. [F247]


Credit Cards, Debit Cards, and Checking

Revenue vs. Relationship Building

Custom and Combined Rewards

Key Finding from the Report:

Results from SYNERGISTICS 2014 study, Optimizing Reward Programs, revealed the extent of participation in various reward programs.  Credit card reward programs were most widespread, followed by debit card and checking relationship rewards. The 2016 survey will reveal any change in consumer participation in various reward programs.

F245 Prop Graphic

Highlights of the Study

This study evaluates the consumer perspective on reward programs for financial services including credit and debit cards and checking.  It examines reaction to pricing, custom reward programs, and combined reward programs.

National Internet Survey – 1,000 consumers age 18 or older.

Key Dates

June 24, 2016 – Charter fee/Intro pricing ends.

June 24, 2016 – Final acceptance of comments on questionnaire.

September 2016 – Project Report available.

Strategic Questions

  • How should financial institutions evaluate and assess the current state of their reward programs? What results are the best measures of success – greater market share, strengthened relationships, or increased fee income?
  • What is consumers’ current behavior profile in terms of usage of reward credit cards? Is usage of multiple reward cards a factor in the market and what is driving this?  Is there revenue potential in marketing reward cards?  Do premium or prestige credit cards represent the next step in reward credit cards?
  • Is there potential for a resurgence in debit card rewards? To what extent do consumers participate in these programs and how much appeal do they have?  Are combined debit and credit card reward programs a viable option?
  • How strong is the potential for relationship-based reward programs tied to checking activity? What has been the experience of consumers with these programs?  Are these programs effective in terms of increased customer activity, new account openings, and relationship retention?
  • What is the current attitudinal and behavioral environment impacting the design and positioning of reward programs? Do consumers prefer lower-value rewards that are given quickly or those with higher value that build over time?  What perceived advantages or benefits can be incorporated into marketing strategies and tactics?
  • What is the experience with and potential for innovative reward programs and delivery methods — including customized rewards, experiential rewards, and targeted messages or alerts based on spending patterns and preferences? Is there receptivity to mobile apps for managing and optimizing reward programs?
  • Do certain reward programs appeal to specific market segments in a way that can be used for positioning and targeting?  Are there consumer segments that represent wider potential for strengthened relationships or revenue opportunities?

Research Issues

  • Rewards have become an almost essential element for many financial services, particularly card products.  They have become an expectation among consumers and now represent the cost of doing business for many providers.  Over the years, the types of rewards that are popular have fluctuated, being influenced by economic factors and changing consumer opinions.  Are certain types of rewards now more popular to certain age and household income segments.
  • Rewards can be associated with credit cards, debit cards, checking accounts, and various other financial accounts and services.  Some reward programs are tied to balances, while others depend on frequency or volume of product or channel usage.  In some cases, consumers have the option to customize their reward experience by selecting rewards or other features of a product or service.  In addition, rewards may be combined based on usage of multiple financial accounts and services – such as usage of credit and debit cards.
  • In developing reward programs, providers need to identify their objectives – fee revenue, account acquisition or customer loyalty and retention.  This study examines consumer usage of and reaction to reward programs for financial services such as credit cards, debit cards, and checking accounts. Relationship and balanced-based rewards, as well as opportunities for fee revenue and account retention and acquisition are evaluated.  This study will help providers gain an understanding of consumer preferences, attitudes, expectations, and behavior patterns, which will assist providers in revitalizing their reward programs. [F245]