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Major Increase In Debit Card Use: Why you should cash in now.

April 11th, 2008

The number of signature debit cards in use in the US is forecast to reach 317 million in 2008. The worldwide debit card market is riding on its increased utilization among young consumers, and is benefiting from the significant rise in the volume of online transactions. Low-value transactions and the lure of benefits offered to cardholders are also factors contributing to the rise in debit card use. Growing consumer preferences for debit cards are mainly attributed to convenient usage, faster transaction pace, and absence of interest debt as found in credit card.

The restructuring of interchange fee rates and continuous industry consolidation are a few measures that are expected to promote the adoption of debit cards among various consumer and merchant segments. Also fairly new to the scene, loyalty and reward programs are expected to boost the prospects of the debit card industry.

The downside to this increase in debit card use however is a corresponding rise in the number of fraud incidents. Identity thieves and hackers are capitalizing on the enormity of the transaction volume and the corresponding decline in the volume of paper checks. As against the earlier instances involving skimming of lost cards, fraud now includes advanced methods involving large-scale database hacking. Lack of appropriate technology and shortage of resources are key factors, particularly with respect to debit card transactions at the point-of-sale, which prevent real-time detection of fraud.

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Entry Filed under: Advice,News

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