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Driving Debit Card Adoption Can Decrease Delinquent Payments

When you open your wallet to make a payment on a loan or bill, have you ever considered why you reached for a particular payment method? Whether you are trying to earn travel miles on a credit card or are being mindful of your budget with debit cards, we all have different reasons for making our payment choices.

 According to REPAY’s Consumer Loan Payment Market Study, consumers prioritize convenience (34%) and speed (29%) when selecting a payment method, with security (22%) not far behind.

Debit cards check the box for all three. They are a tried and true payment method, making them a popular choice for consumers and a lower-cost option for merchants, especially as payment delinquencies are on the rise.

What is a Debit Card? 

A debit card is a payment method tied to a consumer’s checking account at a financial institution such as a bank or credit union. Debit cards take up less space in wallets than cash and eliminate the need to carry around a checkbook.

Whether keyed, swiped or inserted, debit cards draw funds from the cardholder’s checking account, and transactions are limited to the account’s available balance. Merchants receive a response in near-real time if the transaction is good – or declined – based on the balance. 

Reduce Overdrafts and High Costs

Because the card is tied to a bank account, it is less likely for a cardholder to overdraft – they are restricted to the balance they have available at the moment of payment. Whereas, with a credit card, a cardholder could spend as quickly as they can swipe, leading to monthly balances at high-interest rates and financial distress. Debit cards are an excellent option for the budget-conscious consumer.

For merchants, the cost of processing debit cards is often lower than that of credit cards, qualifying at lower interchange rates because they carry less risk, among other factors. Speaking of risk…

Additional Security

Occurrences of fraud and breaches are often in the news, so it is no surprise to see security listed as a top concern for many consumers. It is reported that 65% of people with credit or debit cards have experienced fraud at least once.

Debit cards offer features to combat fraud. Merchants can utilize signature or PIN (a personal identification number, often three or four digits unique to the cardholder) verification or EMV® chip functionality for card-present payments.

For card-not-present transactions, such as those made online or via a mobile device, PINs can still be used, as well as other verification options such as CVV (Card Verification Value, a unique three or four-digit number on the back of the card) or AVS (Address Verification Service, confirming the address of the cardholder).


Digital wallets have hit mainstream status, offering secure storage and convenient access to anything from payment information to rewards accounts to event tickets. estimates that 59% of Americans used a digital wallet in 2022!

Digital wallets enhance the security of payment methods stored within them, including debit cards, by encrypting the card data and sending tokens for payment instead of the actual card data. Cardholders can leave their physical cards at home and rest easy that their information is protected.

Decrease Delinquent Loan Payments

87% of Americans carry at least one loan and look for businesses that can offer modern ways to repay them. Debit cards are the most preferred payment method, with 52% of borrowers opting to use them for their convenience. They offer an easier payment experience and can help reduce delinquent payments.

As discussed previously, merchants receive approval responses from the cardholder’s financial institution almost immediately. As soon as the funds are available, borrowers can make a last-minute payment, and the lender will know in near-real time if the money is good, much unlike the payment methods of yesteryear.

Eliminating painstaking paper checks decreases late payments because there is no longer a wait to 1) receive the check, 2) deposit the check and 3) wait for funds to clear. Debit card usage keeps borrower accounts in good standing and funds flowing consistently to your business.

Faster Loan Funding

Debit cards are beneficial to funding loans as well! Loan fund disbursements can be sent to debit cards in seconds, so borrowers can start using the funds – and repaying them! – more quickly. Consumers are more likely to repeat business with companies that offer faster disbursements, which help maintain and grow businesses.


Convenience, speed and security are the main reasons consumers prefer debit cards. For businesses, debit cards offer a lower-cost payment method that can increase on-time payments.

Meet customers and borrowers where they are with REPAY. Through compliant, omni-channel solutions, including a web portal, text messaging and mobile apps, REPAY enables any size business to take payments using debit cards, digital wallets or ACH. Provide a more simple and more secure payment experience today!

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