Use Case for Decoupled Debit Cards

There has been a fair bit of buzz around decoupled debit products (here is a good write up with many good links from Digital Money Forum). I just haven’t been able to figure out why people would take the time to get one. The points are a nice idea, but most people get those with a credit card, and more banks are beginning to offer points and rewards with their check cards. The user experience doesn’t seem any different (I don’t have one yet), it is a point of sale card that you use like any other. And, who needs another card in their purse or wallet?

I there is a good way to take advantage of decoupled debit, based on the same principle many people use with email (including myself) – single purpose accounts. Here’s an example, since I own my domain, and have unlimited forwarding emails I create a new email address for new sites I register for, and forward the messages to a main account (which for me is Gmail). This way I can remember my login, see where spam is coming from, filter messages from different service providers and just be more organized. I think decoupled debit could help with this too. Much like the good advice to have a card only for online purchases, a decoupled debit card (and more specifically, the card number) can be the single point for any recurring payments that you don’t want to change, so long as that is the only purpose that card number is used for. For example, put all magazine subscriptions, Netflix, newspaper subscription (people still have those?), whatever recurring card based payment that you want to go to the DDA account rather than credit card account. If your ‘normal’ daily use check/debit card is compromised, lost or stolen, there is no need to reset all those recurring payments.

It would be really great if card issuers would give everyone two card numbers, one for only recurring, stable, relatively secure payments, and another, which is on the card that is used for day to day use at merchants, and maybe even a third, ‘high risk’ number for online/card not present purchases – but all linked back to the same ‘master’ account. This way, you wouldn’t need to get a new card if compromised online, wouldn’t need to change recurring payments if the card was lost, and wouldn’t need to manage multiple accounts – all activity ‘forwards’ to one account. Decoupled debit might be one way to get closer to this. There has been some activity around single use/virtual/disposable card numbers which usually expire after a short period of time. These are effective for avoiding fraud in online purchases, but I think they are too limiting, there are too many issues if you want to try to return something, and creates an extra step in the purchasing process most consumers don’t want to deal with.

The financial services industry needs to continue evolving to support the way consumers wish to pay for goods and services, and consumers need flexibility, control, and convenience. This is tough, with competing needs, priorities, costs and profits, but we need to do it.

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