Mercator Blog

Consumers Will Pay for Value-Added Debit Card Services, Up to $700,000 per 100,000 Card Portfolio
Date: January 14, 2015
Karen Augustine
Manager, Primary Data Services
Mercator Advisory Group’s CustomerMonitor Survey Series recent Insight Report, Consumers and Debit in the U.S.: Rising Demand for New Services, based on an online survey of 3,000 U.S. adults conducted in 2014, indicates that while debit card use in the United States is holding steady, there is a significant opportunity for issuers to increase card activation and stimulate greater debit card transaction volume by offering new value-added services. Interestingly, more than half of the survey participants who identified themselves as nonusers indicated they would be interested in activating their debit cards if they were offered these services.

Consumers appear to be most interested in a valuable debit card rewards program, an enhanced security and identification protection service, and a purchase protection/extended warranty service, as indicated by at least half of consumers surveyed for each of the three services. While just 2 in 5 consumers interested in a valuable rewards program for their debit card said they would be willing to pay for it, more consumers expect to pay for travel accident insurance, collision damage/waiver and personal liability insurance for auto rentals, lost luggage insurance, and online personal financial management tools (over half of those interested in these services were willing to pay for them). Just half of those interested in enhanced security and identity protection and a purchase protection/extended warranty service were also willing to pay for these services.

Interested consumers are willing to pay the most for online personal financial management tools (a weighted average of $34 a year) followed closely by travel accident insurance, collision damage/waiver and personal liability insurance for auto rentals, and lost luggage insurance.

Based on these survey results, Mercator Advisory Group estimates the value-added credit card services with the greatest gross revenue potential to be enhanced security and identification protection, collision/damage waiver and personal liability insurance for auto rentals, and travel insurance. We estimate that each of these services has potential to generate nearly $700,000 of annual revenue for issuers based on a 100,000 debit card portfolio. A significant portion of this revenue would likely come from debit card holders who do not currently use their debit card but would use it to obtain these services.

Detailed information on U.S. consumers’ debit card use, card behavior, and interest and willingness to pay for eight value-added debit card services, can be found in Mercator Advisory Group’s CMSS Insight Report, Consumers and Debit in the U.S.: Rising Demand for New Services, based on a 2014 online survey of 3,000 U.S. adults, a sample reflective of the U.S. Bureau of the Census demographic profile, which is accessible by members of the CustomerMonitor Survey Series service.