Portfolios with heavy concentrations of debit cards or balanced portfolios with particularly high debit volumes face severe revenue challenges as Dodd-Frank price controls mature in 2012. The implications of a 70% reduction in interchange will upset the revenue dynamics of debit card issuers.
Customized scoring models can help issuers understand purchase behavior and enable them to return to profitability by directing customers towards better-suited products. Rather than implementing pricing schemes that increase the cost of debit cards, they can use business information tools to identify marginally profitable debit accounts and create customized credit offers that service customers better. Better scoring can also identify accounts for cross sell potential. This permits issuers to increase revenue per household through more services rather than shifting accounts to higher priced card offerings.
Access our latest research for more on the strategies that issuers can use to identify and shift transaction volume from debit to credit cards.