A new alliance between two payment giants aims to accelerate the use of branded debit cards at merchants across the country. On May 22, HSBC Retail Services and electronic payment network operator Debitman Card joined forces to accelerate growth in Debitman's debit card platform, The Retailer's Network, by leveraging HSBC Retail Services' experience issuing private label credit cards, including card program fulfillment and support services.
"The alliance with HSBC will accelerate Debitman's market penetration," says Michael Grossman, CEO of San Mateo, Calif.-based Debitman. "We anticipate rapid growth in both card-issuing and card-accepting merchants participating in The Retailer's Network."
"Through The Retailer's Network, HSBC will offer a unique and cost-effective solution to help retailers better address customer trends and reward loyal shoppers," adds Joseph Hoff, CEO, HSBC Retail Services, a unit of Wilmington, Del.-based HSBC Bank ($159 billion in assets).
According to Grossman, any merchant that participates in Debitman's PIN-based payment network enjoys lower fees for card transactions compared with other card networks. In addition, merchants that issue cards through The Retailer's Network share a portion of the interchange revenue whenever their branded cards are used at a participating merchant.
Further, the network's patent-pending debit card system supports a variety of card programs and can accommodate merchant-specific loyalty programs, Grossman says. "Because Debitman provides retailers the opportunity to save money, [retailers] can pass that savings on to the consumer in the form of incentives and discounts through loyalty programs," he explains.
Offering incentives to customers that use debit cards can mean an added boon to merchants' bottom lines. According to the 2005 Consumer Payments Usage Study by Denver-based STAR, consumers who use debit cards tend to spend more at the point of sale. Debit card purchases are 32 percent higher compared to cash purchases and 24 percent higher compared to purchases paid for by checks, reports the study, which includes data from nearly 13,000 respondents.
According to Grossman, customers who hold cards for network merchants can use the one branded payment card, linked to their checking accounts, to pay for purchases and earn retailer loyalty rewards wherever The Retailer's Network is accepted. He points out that merchant integration into The Retailer's Network requires neither point-of-sale modifications nor investment in card acceptance equipment. Retailers can accept the cards, even if they do not issue them, Grossman adds.
The Retailer's Network comprises more than 200,000 locations nationwide, including Wal-Mart, Sam's Club, CVS, Duane Reade and Walgreens stores.