Consumers are increasingly opting to pay by card over cash. Leading the growth is debit cards. According to the Federal Reserve Payments Study, non-prepaid debit cards reached 87.8 billion transactions, or approximately 56 percent of all card payments in 2021.
For community banks, debit is a critical component of the financial statement, impacting both income and expenses. Choosing the right debit network partner as your second unaffiliated network comes down to the “3 Ps”: profit, protect and people. All of which directly impact your net interchange income for years to come.
Profit revolves around net interchange
Each network affiliated with your debit cards has its own set of interchange rates and fees. When your cardholder swipes, inserts or taps their card to buy something, the merchant (and its acquirer processor) chooses which network the transaction will travel over, typically based on lowest merchant cost.
Interchange is one thing. Net interchange is the much bigger deal.
In the example below, network 1 provides the better interchange rate, but with high network switch fees, the card issuer earns less on this transaction. Network 2 has a slightly smaller interchange rate, but with significantly less switch fees, meaning an issuer earn more net interchange with network 2.
Protecting cardholders’ transactions
Fraud continues to be a major pain point for financial institutions. According to a recent survey, every $1 lost to fraud costs U.S. financial services firms $4.23, a 16.2% increase since 2020.
SHAZAM protects your cardholders’ transactions through our fraud management solution, powered by FICO® Falcon®. This powerful tool uses powerful modeling and state-of-the-art artificial intelligence to detect suspicious activity. Here’s how it works: each time a card is used
Additionally, SHAZAM’s Fraud Advisors™ helps your financial institution protect your cardholders and reduce fraud losses. This consultation and investigation service provides SHAZAM’s standard fraud offering but adds a structured and proactive solution, personalized just for you.
People who make the network, work
The strength of a payments network is only as strong as the people behind it. SHAZAM client support is available when you and your team need it. Our team is made up of people with operational banking experience and is 100% located in the U.S. The department handles thousands of calls, emails and tickets from our financial institution, merchant and processor clients each month. The team answers questions about dispute services, fraud, reports and more.
Picking the right partner
The debit landscape has changed significantly over the past decade and continues to change. Keep up with the changes by choosing the right debit network partner who can drive profits through net interchange, protect what you earn with fraud services and has people who serve your needs.
