Joyce Moed | Business Samples

Debit Cards Have Passed Credit Cards
By Joyce Moed, Reporter

FORT LAUDERDALE, Fla.–When it comes to card growth, debit cards have passed credit cards.
Chip Filson, president of the Washington, D.C.-based credit union research and consulting firm Callahan & Associates, shared this information with the attendees of CSCU’s Annual Meeting, which took place recently in the Harbor Beach Marriott Resort here.

“This is an exciting time to be in cards,” Filson said. “The new technology is beginning to explode. Every day it’s changing. It’s a wonderful time to be in the credit card business. This is a growth business.”

The challenge for financial institutions, Filson said, is getting people to use their cards more than the others they may carry in their wallet.

“Most of us carry different cards for different reasons,” Filson said.

One example Filson cited as a way to get members to use your card is by offering incentives, such as a percentage back on gas purchases paid at the pump.

Filson stressed that while credit card loss are about 25% higher than fraud losses, it’s still not a reason for credit unions to not be in the card business.

“Keep things in perspective,” he said.

And when it comes to being a credit card issuer (and user), Filson said what is most important is to be responsible.

“Credit unions do the right thing,” he said. “Responsible use of credit is what it’s all about. This is why credit unions were created in the first place. We’d all like to not carry a balance. But sometimes responsible borrowing is critical.”

Financial institutions now have a lot of competition when it comes to the card business, Filson said.
“Paypal is an example,” he said. “Paypal has announced they are going to issue a debit card, using the Paypal network.”

The advantage for credit card users have a card issued by their credit card is simple, Filson said.
“Members want a face behind their card,” he said.

“I think credit unions will succeed with cards for one simple reason,” Filson added. “Credit unions provide better value. Period. It’s as simple as that.”

And with other parts of the financial institutions’ business suffering, this may be just the right time to focus on cards, he said.

“We’re seeing a breakdown,” he said. “People can’t sell–subprime mortgages, student loans. It’s really the market. This isn’t just a breakdown–it’s a revolution. I think our time is now, and we can win this battle. We can establish a basis in the credit union business for the next 25 years. Our time is now.”