The Pen vs. the PIN: Why Signature Debit Rewards Provide Far-Reaching Benefits

The sweeping reform of the Durbin Amendment has had ripple effects across the banking industry. Faced with caps on debit interchange fees, financial institutions with more than $10 billion in assets have moved swiftly to transition their debit customers to more profitable credit card payment platforms. And they have done so largely using rewards programs.

“We have seen institutions over $10 billion in assets get out of debit rewards in droves,” said Andrew Gates, CEO of Azigo, Inc. and Member Rewards by CO-OP consultant for CO-OP Financial Services. “That makes sense as their debit interchange has been restricted and reduced. What doesn’t make sense are all the financial institutions under $10 billion in assets that dropped their debit rewards programs or shelved plans to roll them out.”

Today there are more than 50 billion PIN, signature and prepaid debit transactions conducted in the U.S. every year, according to the Federal Reserve. The 2015 Debit Issuer Study revealed that the U.S. banking industry issues approximately 165 million new debit cards per year in aggregate, and the average active cardholder conducts 23.2 debit transactions per month.