Decoupled debit, a payment form that lets consumers pay for purchases directly from their checking accounts, has been quietly and slowly gathering users where meaningful rewards are a part of the offering. It is a payment form that allows merchants to circumvent the card networks for a less expensive payment transaction.
The new report Decoupled Debit: The Start of Mainstream Adoption? provides an understanding of the current decoupled debit market in the U.S. and how it works, why the current payment industry environment may foster more decoupled debit programs, indicators that decoupled debit may be gaining popularity and thus threatening bank-based debit, and the revised Payment Services Directive (PSD2) in the European Union.
"Decoupled debit is a payments product to watch for future development and growth. It offers merchants most of the benefits they seek in a payment-namely, independence from the card networks, less expensive transaction processing costs, a platform to extend rewards, and less fraud than traditional card transactions," commented Sarah Grotta, Director, Debit Advisory Service and author of the report.
Highlights of the report include:
- Current market sizing
- A look at current decoupled programs
- Decoupled debit in the European Union
- Product challenges
- Market forces that are providing growth opportunities.
1. Executive Summary
3. Decoupled Debit in the Wild
4. The U.S. Decoupled Debit Market
- Target REDcard™
- First Data
5. Why the Time May Be Right for Decoupled Debit
- Cost Savings and Incremental Sales Are Motivating
- Digital Is Becoming Mainstream and Can Help Decoupled Debit’s Success
- The Infrastructure Exists
- Development Outside the U.S. Is Growing
- Faster Payments May Enhance Decoupled Debit
6. Challenges Do Exist
7. Conclusion: If Not Now, Then Decoupled Debit Will Be Forever a Niche Product
List of Tables and Figures
Table 1: Merchant Rights Events
Table 2: Survey of Decoupled Debit Programs
Figure 1: Interchange Costs of Covered and Exempt Card Transactions