2009 Debit Issuer Study, Commissioned by PULSE,Reveals Greater Pin Debit Use and Lower Fraud Losses
HOUSTON--(BUSINESS WIRE)--Jun. 4, 2009--
The 2009 Debit Issuer Study, commissioned by PULSE, identified
several positive trends for financial institution debit card issuers,
including sustained debit transaction growth despite the recession. This
edition of the comprehensive debit card industry study also found that
use of PIN debit has increased, while fraud loss rates have declined.
Issuers surveyed experienced debit transaction growth of 8 percent in
the second half of 2008, composed of 15 percent growth in PIN debit
transactions and 4 percent growth in signature debit. Survey
participants predicted 7 percent growth each for PIN and signature debit
in 2009.
“Although the economy is a challenge for debit card issuers, as it is
for everyone, debit transaction growth remains strong,” said Cindy
Ballard, PULSE executive vice president. “Debit card use is expected to
continue to grow as the economy bottoms out and begins to recover,
because consumers use their debit cards for a large portion of necessary
everyday expenses.”
The 2009 Debit Issuer Study revealed that more than a quarter of
all debit transactions (27 percent) in 2008 were for less than $10.
“In most cases, these transactions are replacing cash, highlighting a
clear consumer preference for electronic payments,” said Ballard.
Debit card penetration – the percentage of eligible account holders who
have a debit card – remained flat at 73 percent. Using an expanded
definition of “active” debit cards, the number of issued cards used
actively in 2008 was 66 percent.1
PIN debit accounted for 35 percent of debit transactions in 2008, up
slightly from 34.2 percent in 2007. The average debit transaction value
was $42 for PIN debit and $37 for signature. Both figures have declined
by roughly $1 compared to the previous study. In addition, active debit
cardholders performed 17.3 point-of-sale transactions per month, on
average, compared to 16.6 transactions per month in the 2008 survey.
Debit card fraud losses at the point of use declined in all categories.
PIN point-of-sale losses, as measured in dollars per card per year, fell
to $0.15 from $0.19. Similarly, ATM losses declined to $0.56 per card
per year from $0.61, and signature debit loss rates fell to $1.81 from
$1.92. Although losses at all three usage points declined
year-over-year, the survey did record an increase in share for ATM
losses, to 38 percent of total debit fraud losses in 2008 from 25
percent in 2007.
Additional survey findings include:
-
Active debit cardholders performed 3 ATM transactions per month, on
average, down from 3.4 in the previous survey.
-
More than half of issuers surveyed (53 percent) participate in a
surcharge-free ATM network, down slightly from 56 percent in 2007. And
43 percent offer ATM surcharge reimbursements to at least some
cardholders.
-
Bill payments represented 10 percent of signature debit transactions
in 2008, compared to 7 percent in 2007.
-
The percentage of debit card issuers offering debit rewards programs
continues to grow, rising two percentage points to reach 53 percent
this year.
-
Thirty-seven percent of issuers offer mobile banking, compared to 15
percent in 2008, while 38 percent plan to introduce it soon, up from
28 percent last year.
“The 2009 study uncovered several reasons for optimism among financial
institutions that issue debit cards,” noted Tony Hayes, an Oliver Wyman
partner, who served as project lead on the study. “Among them, debit
card-based bill payments account for a small but rapidly growing share
of debit card payments, a market with significant potential for growth
in the coming years.”
The 2009 Debit Issuer Study results support PULSE’s view that
debit cards still have considerable long-term growth potential.
“Despite the challenge of navigating through an economic downturn, debit
card issuers have much to be encouraged about,” said Ballard.
“Transaction growth remains robust, and issuers see further improvements
in the performance of debit card portfolios as a key opportunity in
2009.”
About the Study
The 2009 Debit Issuer Study is the fourth installment in the
study series. The series provides an objective fact base on debit card
issuer performance and financial institutions’ outlook for the debit
card business. Seventy-three financial institutions – including large
banks, credit unions and community banks – participated in the 2009
study, which was conducted by Oliver Wyman. Collectively, the
participants issue 94 million debit cards and operate 61,000 ATMs. The
sample is representative of the U.S. debit market in terms of
institution type, location and debit network participation.
About PULSE
PULSE is one of the nation’s leading ATM/debit networks, currently
serving more than 4,500 banks, credit unions and savings institutions
across the country. PULSE is owned by Discover Financial Services
(NYSE:DFS). The network links cardholders with more than 289,000 ATMs,
as well as POS terminals at retail locations nationwide. The company is
also a valued resource for industry research related to electronic
payments and is committed to providing its participants with education
on evolving products, services and trends in the payments industry. For
more information, visit www.pulsenetwork.com.
Media may request an executive summary the study by contacting
Anne Rhodes.
1 In previous Debit Issuer Studies, the most common
definition of “active” cards was those used to make any signature
transaction in the last 30 days. By this measure, 56 percent of debit
cards were active in 2008, a slight decline from 2007. An equal number
of issuers now define active cards as those used to conduct any
transaction in the last 30 days, resulting in the higher 66 percent card
activation rate.
Source: PULSE
PULSE
Anne Rhodes, 832-214-0234
arhodes@pulsenetwork.com