A recent survey of consumers suggest that retailers' push to cut financial institution income from debit cards will succeed in at least slowing if not reversing consumer migration from checks and cash to debit cards.
First the good news. The poll, commissioned by the Associated Press and conducted by GfK Roper Public Affairs, found that 68% of consumers that have debit cards use them to make purchases more often than credit cards.
But the survey also found that 61% of consumers said they will switch to another form of payment if their financial institution charged as $3 per month for the use of the debit card. The numbers go up to 66% if the fee was increased to $5 per month and to 81% when the proposed fee moved to $7 per month.
And where do the surveyed consumers say they will take the transactions they previously put on debit cards? Back to cash and checks.
According to the survey, 80% of consumers said they would be either somewhat likely (27%), very likely (25%) extremely likely (28%) to move back to cash and 66% reported being somewhat likely (24%), very likely (19%) or extremely likely (23%) to move back to checks.
Ironically as well for merchants, 40% of consumers said they were either somewhat likely (19%) very likely (10%) or extremely likely (11%) to use credit cards instead. Credit cards carry a significantly higher interchange rate.