Digital Transactions recently asked our Vice President of Issuing Products, Matt Withey, to weigh in on the growing use of debit products among fintech companies. According to Withey, a driving force behind the trend toward debit is the simple fact that debit keeps consumer funds flowing through financial service providers’ systems.
But there’s more to this market shift than a desire to capture a portion of America’s debit spending. Here are a few key understandings about the growing debit adoption among fintechs:
- Consumers prefer debit for everyday purchases. Now more than ever, consumers are opting to use their debit accounts for both online and in person purchases, particularly small ticket items. “Fintechs are looking for ways to boost acquisition and retention,” Withey says. “Layering in a debit solution helps [them] achieve that goal.”
- Debit is a sizable value-add for lending, investing and savings apps. Allowing customers to actively move money into and out of a debit account allows lending, investing and savings app users greater control of the money they use for purchases and the money they set aside.
- Debit functionality attracts traditionally underbanked individuals. Gig workers- now making up approximately 34 percent of the U.S. Workforce according to the Bureau of Labor statistics- require debit products to receive funds and to help them manage their money, making them a target audience for fintechs with debit capabilities.
- COVID-19 has only increased the demand for debit. The pandemic has sent millions of consumers online, where cash payments are not an option at checkout. These shoppers are turning to debit for purchases ranging from groceries and household items to retail luxuries.
As an example of this trend toward debit, Digital Transactions highlighted MetaBank’s partnership with MoneyLion Inc., a provider of mobile banking, lending, investment products and financial memberships. This partnership yielded a product, RoarMoney, which can be used as a standalone account or in conjunction with MoneyLion’s lending and investing products.
“Debit functionality in itself is not revolutionary,” Withey said. “What’s revolutionary is the innovation fintechs are bringing to these apps to help consumers better manage their money.”
Read the full Digital Transactions article here.