Of Special Interest
11th August 2015
Debit industry changes markedly in 10 years of the Debit Issuer Study
The 2015 Debit Issuer Study, commissioned by PULSE (a Discover company), and conducted by Oliver Wyman, highlights the underlying trends that have contributed to the rise of debit during the 10 years since the study was introduced. The analysis of the past “Decade of Debit” finds the use of debit increasing significantly at the point of sale:
Figures for 2014 (compared with 2005):
• Monthly POS Transactions per Active Debit Card: 21.2 (16.1)
• Annual Spend per Active Debit Card: $9,291 ($7,807)
• Average Ticket Size: $37 ($40)
• Monthly ATM withdrawals per Active Debit Card: 2.0 (3.4)
“The past decade saw a major shift in consumer preference to paying with debit cards, which accelerated after the 2008-2009 recession,” said Steve Sievert, Executive Vice President of Marketing and Communications for PULSE. “We believe there is still opportunity for debit growth, considering that consumer use of debit for smaller purchases is rising, and the average active debit card is used about five times per week.”
Ten years ago, debit cards had just overtaken credit cards as consumers’ most commonly used payment method. Now, there are over 50 billion PIN, signature and prepaid debit transactions in the US every year, according to the Federal Reserve – almost twice as many as credit, the next most commonly used non-cash payment method. The average active cardholder conducted 23.2 debit transactions (POS and ATM) per month last year, according to the study.
During this decade, the average debit cardholder increased usage of debit at the POS by 32 per cent. In the same timeframe, card use for ATM withdrawals declined by 41 per cent.
“Consumer use of debit has been nothing short of remarkable,” said Tony Hayes, a partner at Oliver Wyman. “Debit has steadily gained wallet share as consumers shift their spending to this payment type. The use of debit for small-ticket purchases is particularly noteworthy, where one-third of all debit transactions are for less than $10 – purchases that historically would have been made with cash or not at all.”
Seventy financial institutions – including large banks, credit unions and community banks – participated in the study. Collectively, the participants issue approximately 147million debit cards, representing approximately 47 per cent of total US debit transactions. The sample is representative of the US debit market in terms of institution type, geography and debit network participation.