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Chattanooga: Debit card trend rising

By: Amy Williams
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Frank Hughes

In the last few years, Kathy Reed has drastically cut down her trips to the ATM, and it’s not because she doesn’t occasionally need cash.

For Ms. Reed, who owns Bill Shores Frames & Gallery on Chattanooga’s North Shore, it’s just so easy to get the cash at the grocery store or as she is making some other purchase.

“I used to use it (the ATM) all the time,” she said. “When I use the debit card at stores, they offer me cash back, so that is a big part of it.”

More people than ever are trading paper for plastic when it comes to paying at the checkout, and banks are starting to take notice. Officials at Regions Bank, which has 78 ATMs in Hamilton, Bradley, Meigs, Monroe and Catoosa counties, said they have noticed a downward trend in usage of automated teller machines.

“Use of ATMs appear, from what we are seeing, to have plateaued over the last few years,” said Michael Mathis, president of Regions Bank in Chattanooga.

The first ATMs went into widespread use in the United States in the 1970s, and the number of machines grew steadily through the 1990s, Mr. Mathis said. But in the last five or six years, the numbers remained level and have even started to decline slightly, he said.

Staff Photo by Kelly Wegel-- Melody Dunaway banks at a Region Bank ATM downtown after work. Increased use of debit cards has led to a decline in ATM use, according to bank officials.

Frank Hughes, president and chief executive of Cornerstone Bank, said the volume of ATM usage has stayed relatively unchanged in recent years, but there has been a significant decline in the volume of checks his bank processes.

In 2007, Cornerstone processed 2.7 million checks, 1.3 percent fewer checks than in 2006. So far this year, the bank has processed just over 1 million checks, fewer than what the bank handled this time last year.

“If this continues, we are looking at a 12.5 to 13 percent reduction in the number of checks processed,” said Debbie Baldwin, Cornerstone’s deposit operations manager.

Mr. Hughes said just as the number of check transactions at Cornerstone goes down, debit card transactions are going up.

“We are seeing a pronounced volume change in our physical checks that we process as people transition into debit card usage and automated bill pay,” he said.

Officials at FSGBank said the number of debit and ATM transactions are up in general. But, said Terry Todd, the bank’s Chattanooga president, the change represents a challenge for banks which want to remain competitive.

“What we see in the future, we are going to have less paper items because of the debit cards, credit cards and ATMs, but we are still going to have to focus on the customer who likes to come in the bank with those paper items and visit the teller personally,” he said.

For bankers, the shift to more card-based transactions is representative of the industry’s efforts to make purchases as convenient for customers as possible, Mr. Todd said.

“The day of writing a check has a short life,” Mr. Hughes said.

The trend is happening throughout the industry, Mr. Mathis said, and indicates that society is getting used to using more electronic forms of payment and moving away from using cash as much.

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