July 2022

Why Credit Beats Debit: Launching a Card for Today's Consumers

Between ongoing innovations in digital payments and rapidly evolving consumer behavior, businesses looking to launch a credit or debit card have an opportunity to be at the forefront of the fintech space. The key word here, however, is opportunity. As competition grows, businesses will need to be increasingly strategic, carefully determining the right approach for their individual needs and business models. We’re here to help bring your strategic vision into focus. First, you have to determine which type of card will make more sense for your business: credit or debit? 

If you know anything about Deserve, then you probably know our preference. The biggest (and the most obvious) reason we launch credit card programs is, simply, credit card programs create more revenue streams for our partners than debit card programs. Credit card providers earn revenue on extra fees (like foreign transaction fees), higher interchange rates, and interest that debit card providers cannot charge. 

But if you are still on the fence, here are two more reasons why your business should launch a credit card.

Fraud protection

According to a recent Forbes article calling for a more coordinated attack on payment fraud, financial crimes now make up a startling and historic 3.6% of global GDP. Given the significant increase in risk, security and fraud protection need to be a top priority for businesses hoping to launch a successful card program. And when it comes to payment security, credit cards continue to outperform debit cards by a wide margin.

Credit cards have much stronger legal protections in terms of liability. Thanks to the Fair Credit Billing Act (FCBA), cardholders will rarely be responsible for paying back any charges that have been proven to be fraudulent and will never be liable for more than $50. While the Electronic Funds Transfer Act helps debit cardholders to challenge unauthorized transactions, these liability protections come with a strict timeframe. If an average cardholder notices fraudulent activity too late, their chances of getting their money back are drastically reduced.

With Deserve, your business can offer a card program built with the most technologically advanced and scalable security features on the market. In addition to being PCI-compliant and SOC2 certified, our machine-learning-based model ensures fast responses to adverse events and protections that evolve with modern security threats. Deserve’s utilization of role-based permissions and zero-trust architecture also provides an additional layer of security, comprehensively protecting sensitive data.

Businesses need flexible, innovative rewards programs

Loyalty and rewards programs are gaining popularity, so much so that more than 90% of companies now offer them in some form, according to Accenture. Additionally, in a separate consumer survey conducted by Bain & Co., well over half of respondents said that an enticing rewards program can actually alter their spending habits. Sure, there are debit cards that offer cash-back rewards and other perks, but they are far behind the flexibility and innovation of those offered by credit cards.

At Deserve, we collaborate with our partners to integrate never-before-seen reward structures, like BlockFi’s crypto-based rewards. Our customized approach has brought new life and creativity to traditional rewards like cashback. Our partnership with BlockFi is just one example of how our approach leads to game-changing innovations.

Credit for the win

Debit cards will probably always have their place, but in today’s modernized landscape, debit cards simply cannot compete with the benefits of credit cards. And with Deserve, there’s simply no reason to settle for less. Contact our sales team here to learn more!

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