Andera Data Shows Increase in Credit/Debit Over ACH

Today I thought I’d share an interesting tidbit of data from Andera’s customer base. We provide our online account opening solution to over 500 bank and credit unions. Our customers can choose to allow their applicants to fund new deposit accounts online either through:

1. ACH Transfer
2. Credit/Debit

Because of different risk protocols, not all of our customers allow all funding methods; about 65% of customers on our original Andera platform allow ACH Transfer Funding, and about 50% allow Credit/Debit Funding. However, there are still about 150 institutions who offer both types of funding.

So the question is, when both options are available, how do applicants prefer to fund?

Unsurprisingly (by my preferences, at least) about 3/4 of customers chose to fund via Credit/Debit over ACH Transfer in 2013. More interestingly, the percent of consumers who choose to fund via Credit/Debit  has been steadily increasing over the last 7 years:

(Note: this is a simple data slice, and I didn’t limit my sample to a single set of institutions, but preliminary poking suggests that the trend is robust.)

Although Credit/Debit funding has always been the preferred applicant funding method, ACH Transfer has always been the leader in total amount funded. This is because most institutions put lower limits on Credit/Debit funding because it is more expensive than ACH Transfer and because there is a greater risk of fraud. However, the trend toward Credit/Debit funding is even stronger when you look at dollar amounts. The percentage of total new deposit account balances funded by Credit/Debit has quadrupled since 2007!

Why, you ask? Well, the truth is, I’m not sure. It could be that consumers see Credit/Debit cards as safer and more reliable than they did 10 years ago. It could be that, because of the rise of mobile account opening, more and more applicants are applying on the move, and can’t shuffle through their home office to find a copy of their account number. It could be the decline of paper checks; I usually look at a check to get my routing information, but since I started managing my rent payments with a mobile application, I no longer use checks at all.

No answer at the moment, but certainly food for thought!