A Pulse Survey Shows Fees, Restrictions Risk Debit Users’ Ire

A new national survey of debit card holders indicates a significant portion of consumers would be inclined to punish retailers and banks if they imposed fees or tried to restrict the range of accepted payment products. When asked how they would react if a merchant no longer accepted their debit card, 81% said they would be “very unhappy” and almost 30% said they would stop shopping there. When asked how they would react if a merchant slapped a fee on debit card transactions, 79% said they would be unhappy, with 37% of those adding they'd switch to another payment type and 21% indicating they'd stop going to that merchant. In February, Wal-Mart Stores Inc. stopped accepting MasterCard's signature-based debit card, though apparently the action has had little effect so far on the mega-retailer's business. Nor can banks rest easy, according to the survey, which was sponsored by Pulse EFT Association, an electronic funds transfer network based in Houston. Some 85% of the respondents said they'd be “extremely dissatisfied” if their bank started charging a fee on debit card transactions, while nearly 44% said they'd switch to another bank. Not surprisingly, the survey shows one flavor or another of debit card as the favored payment instrument of those surveyed. Some 23.5% said they use a debit card secured by a personal identification number most often; 17% indicated they favored a debit card secured by a signature; and almost 14% responded they used a debit card most often to pay but didn't distinguish between authentication methods. Those who say they pay most often with a credit card amounted to 17.8% of those surveyed, while those who favor cash (15.4%) and checks (12.6%) accounted for the remainder. The most often cited reasons those who prefer debit gave were a belief that debit is faster and a desire to bypass credit balances and finance charges. Cash back at the point of sale and sweepstakes and promotions have little effect on preferences, the survey shows. Debit and credit cards scored the high levels of satisfaction in the survey when respondents rated their favored method on a scale of 1 to 10. PIN debit users reported a 9.6 level of satisfaction. Credit cards came in second at 9.5 and signature-debit third at 9.3. Checks came in at 8.1. Both check and cash users are “susceptible” to conversion to debit cards, according to Pulse, since check users voiced some “concerns” about checks in the survey and cash payers showed a preference for PIN debit when presented with a choice between checks, credit cards, and both PIN and signature debit. The survey, conducted by Analytica Inc., included 716 people across the country who have used a debit card at some point in the past to make a point-of-sale transaction. They were asked which of six payment methods?PIN debit, signature debit, credit card, store charge card, cash, check?they used most often in grocery stores and gas stations and at large retailers.