By: Bob Sterner, National Account Manager
With consumers juggling multiple credit and debit cards, community banks and credit unions are battling to earn “top-of-wallet” status — having their debit card be the preferred and most frequently used payment method by account holders.
The Value of Top-of-Wallet Status – and Why It’s So Elusive
Being top-of-wallet is essential for card issuers, as it leads to increased usage, revenue and loyalty. But it’s a competitive position. And once top-of-wallet status is lost, it can lead to purchase inactivity, reducing revenue dramatically since consumers spend four times more with their top-of-wallet choice than they do with other payment methods.
The good news for community banks and credit unions is debit cards still reign supreme. A 2024 study by J.D. Power found that 72% of consumers use a debit card at the point of sale. And in the U.S., 48% of consumers store their card details on websites or apps for subscriptions and digital wallets like Apple® Pay and PayPal®. This is significant because a correlation has been shown between card-on-file (COF) users and spend.
But the challenge to capture and keep top-of-wallet status with your financial institution’s debit card will only increase, as the average consumer holds nearly 4 credit cards and preferred payment methods can easily be switched based on convenience, rewards and digital integration.
To capture and keep top-of-wallet status with your financial institution’s debit card, it may be time to incorporate the following three strategies.
Step 1: Build a strong relationship from the start
Winning top-of-wallet starts with effective onboarding. When new cardholders have smooth and engaging early experiences, they’ll be more likely to continue using the card. To make this happen:
- Optimize onboarding: Guide new account holders through a seamless, step-by-step setup. Track key onboarding metrics to identify drop-off points and adjust the process to reduce abandonment.
- Engage early and continuously: Once onboard, don’t let an account holder slip away through inaction. Keep communicating through 1-to-1 personalized communications to solidify a familiar foundation and keep engagement ongoing.
- Encourage referrals: Make it easy for account holders to refer friends and family, rewarding them with points or incentives to boost card adoption.
- Share benefits of debit cards: The Federal Reserve found that the number of non-prepaid debit cards increased more than any other card type, representing 56% of all card payments. And customers under 40 years old are the most likely users of debit cards (82%). This represents a golden opportunity to capture a young segment and create a long-term relationship with your debit card. Through targeted messaging, banks and credit unions can inform users of all the benefits of debit cards — no interest, fewer fees, reliable security — to make a compelling bid for top-of-wallet status.
Step 2: Promote card-on-file (COF) usage
Reaching the top of “digital” wallet status requires banks and credit unions to influence that decision actively. To persuade account holders to use their debit card as the COF for recurring payments like bills, subscriptions and memberships:
- Highlight COF benefits: A seamless debit payment experience encourages users to adopt COF, which comes with convenience and efficiency and can even help avoid late fees by automating payments.
- Educate users: Interactive tutorials or videos can show users how easy it is to add their debit card to popular digital wallets or e-commerce platforms. Research has shown that consumers who don’t actively adopt COF in the first six months aren’t highly engaged with the card for long.
Step 3: Make the relationship ‘stickier’ with rewards and personalization
More than one-third of consumers (35%) use cards mainly to earn rewards, according to a Forbes Advisory survey. Incentives and a personal touch keep card users coming back, and a strong rewards program can be a deciding factor for many. To cement the relationship:
- Offer debit rewards and incentives: A tiered debit card rewards program that rewards both COF activity and usage makes for engaged, active account holders. For example, offer bonuses for storing the debit card with multiple merchants or subscription payments, along with benefits for everyday swipes and purchases.
- Customize engagement: Leveraging data intelligence can help your bank or credit union better understand an account holder’s spending patterns and preferences, which then lets you deploy personalized offers. Providing discounts at favorite stores or offering unique benefits can increase loyalty and debit card usage.
- Continue to nurture and cross-sell: A study by Salesforce found that 66% of consumers expect companies to understand their needs. By using data-driven insights, community banks and credit unions can stay present in their account holders’ lives, anticipate needs and cross-sell relevant financial products.
Debit card strategy in action
Dramatic results can be observed when these steps are taken to move a debit card to top-of-wallet. One example is a New York-based bank with assets of $5B, which used Velocity Solutions’ data-driven strategy to elevate debit card performance. By focusing on retail performance, it was able to achieve:
- A 27% growth in checking accounts
- A 61% increase in debit card swipes
- A 101% increase in debit card spend
- A25% increase in swipes per debit card account
- A 56% increase in spend per debit card account
- A 382% increase in “heavy users” (21+ swipes)
Debit is still king, and achieving top-of-wallet is the gateway to long-term account value and account holder loyalty in an increasingly competitive market. With a targeted approach that emphasizes engagement every step of the way, community banks and credit unions can create lasting, mutually beneficial relationships through top-of-wallet and COF status.
Contact Velocity Solutions to enhance your retail strategy today.