Acquiring solutions provider Total Systems Services Inc. (TSYS) released what it calls the "hybrid card." The product allows consumers to switch between a credit line and one or more debit accounts on a single card.
According to Sarah Hartman, Senior Director, Payment Solutions for TSYS, the offering is an extension of the company's existing credit card product. It remains essentially a credit card - it contains a specified line of credit and posts payments initially as credit purchases - except that consumers can connect it, instantly and without a third party provider, to their checking accounts for specified transactions.
"Think of it as any other payment you can make to your credit card today," Hartman said. "You can link to certain deposit accounts, either through a third party bill pay service or perhaps a direct bill situation you've set up with your credit card holder. We're just taking that to the nth degree and letting [consumers] automate that process."
Hartman said consumer control is afforded through the card issuer's Web portal, which is expanded to give consumers the power to do "preference setting" on their cards.
Consumers with the hybrid card who visit their issuer's Web portal can designate what bill payments are made using their primary credit line and which ones will draw from a checking account. Those preferences can then be changed anytime to accommodate changes to the consumer's financial situation, Hartman said.
"Most issuers are interested in incorporating that functionality and preference setting as part of their overall Web site for their credit cards," Hartman said.
"Normally you go out to a card site and you can see your transactions, you can change your address and you can make one-off payments. So this is a logical addition to the functionality."
According to Hartman, TSYS is exploring the use of hybrid cards for merchant loyalty programs as well.
Consumers who use proprietary credit lines at merchant stores would be given the option of either using that merchant credit line or drawing from another debit source; for programs that reward points whenever the loyalty card is used, the option of outside funds would encourage the use of that card and help consumers accrue points.
Hartman said any switching between credit and debit lines requires consumers to note the change online; she found "intriguing" the possibility of allowing consumers to automatically roll over from one account to another when a given source of funds is surfeited (in the manner of overdraft protection at banks). She called the hybrid card the "first iteration" of a program that would likely add new functions over time.
"It just allows the cardholder to really determine up front what they want to pay now versus pay later, and they can select a variety of accounts they want to use for the pay now feature," she said.
"We found that, given some of the tightening credit lines and other activity, this comes at a really good time for consumers, helping them to pay down their balance so the credit line is there to get additional spend out of."
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