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Cardholders Give Security Innovations a High Five

April 28, 2022

In the highly competitive market for credit cards and debit cards, issuers are constantly looking for ways to differentiate their card programs. Their list of strategies and tactics includes rewards, value-added features, and other program benefits. Security innovations (including alerts, on/off switches, and biometric identification) have significant appeal to cardholders. These are among the findings from Innovations in the Card Market, a recent study from Phoenix Synergistics (a MarketCast company). The study included a nationwide internet survey of 2,000 consumers ages 18 and older.

Account alerts can provide cardholders with a variety of real-time information, ranging from account-management matters (such as statement alerts) to those involving security (such as unusual account activity or international transactions). Overall, approximately seven in ten cardholders report receiving some type of card-account alert either by email (71%) or text message (65%). The types of alerts received vary somewhat based on email or text. Unusual account activity is one of the top alerts for both text and email. Other common alerts include a card being used internationally and a large purchase being made with their card.

An “on-off” feature (sometimes called an on-off switch, a pause button, lock/unlock, or freeze) is another valuable security innovation for payment cards. A majority (59%) of debit/credit card users indicate that they have an on-off feature on either a credit or debit card. Four in ten credit card holders indicate they have an on-off option, and one-third of debit card holders have this feature. Overall, approximately one-third (36%) of credit/debit card users have used an on-off feature. Usage for credit cards (22%) and debit cards (20%) is about equal. A significant number (77%) of credit and debit card users indicate that an on-off feature is very/somewhat valuable, and more than four in ten (45%) rate the feature “very valuable.” Millennials are the generational group most likely to find the on-off feature to be valuable. In addition, perceived value increases with household income.

Biometric-identification methods are also receiving a great deal of attention as a security innovation for payment cards. A large number of consumers believe that each of the various methods in the study would be an improvement. Fingerprint scans top the list followed by face scans, eye scans, and voice recognition. Overall, close to half (48%) of consumers indicate they have used some form of biometric identification when making a payment. Fingerprint scans are most likely to have been used.

Further evidence of the importance of security features was found when credit card users and prospects for obtaining a card in the next year were asked about the importance of various features when choosing a credit card. Of the benefits and features in the study, reliable ID-theft and security features rank at the top along with the issuer having a good reputation. An on-off feature is important to three-fourths, and biometric-security features are important to close to seven in ten.

Bill McCracken, president of Phoenix Synergistics, stated, “Card issuers can choose from a number of innovations to differentiate their card programs. It is clear that security features are critical to competing in today’s market. They are no longer optional. Cardholders, particularly Gen Z and Millennials, think security features are valuable. In addition, issuers need to emphasize the availability of security features in their marketing communications—both to encourage adoption of their cards and to retain current cardholders.”

These are among the findings from a recent Phoenix Synergistics report, Innovations in the Card Market, which features responses from 2,000 online interviews with consumers ages 18 and older.

Phoenix Synergistics (a MarketCast company) is the leading provider of multi-sponsor marketing research for the financial-services industry. For more information, contact Bill McCracken, president, Phoenix Synergistics, email bill.mccracken@phoenixmi.com

For more information about this report, click here.
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