Typical Debit Card Is Used 21 Times per Month at POS, a 32 Percent
Increase in Usage Over the Past Decade
HOUSTON--(BUSINESS WIRE)--Aug. 6, 2015--
The 2015 Debit Issuer Study, commissioned by PULSE, one of the
nation’s leading debit/ATM networks, 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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Monthly POS Transactions
|
|
|
|
|
|
|
16.1
|
|
|
|
|
|
|
|
|
|
21.2
|
per Active Debit Card
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Spend per Active
|
|
|
|
|
|
|
$7,807
|
|
|
|
|
|
|
|
|
|
$9,291
|
Debit Card
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Ticket Size
|
|
|
|
|
|
|
$40
|
|
|
|
|
|
|
|
|
|
$37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Monthly ATM withdrawals
|
|
|
|
|
|
|
3.4
|
|
|
|
|
|
|
|
|
|
2.0
|
per Active Debit Card
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
“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.”
Debit extends lead as Americans’ preferred payment method
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 U.S. 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 percent. In the same timeframe, card use for ATM
withdrawals declined by 41 percent.
“Consumer use of debit has been nothing short of remarkable,” said Tony
Hayes, a partner at Oliver Wyman, who co-led the study. “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.”
Debit economics
Ten years ago, financial institutions reported receiving a weighted
average interchange of $0.41 for each consumer debit transaction. The
introduction of Regulation II, which went into effect in the fourth
quarter of 2011, fundamentally changed debit economics.
The interchange rate cap in Regulation II limits per-transaction
interchange to large issuers (≥$10 billion in assets), while issuers
with less than $10 billion in assets are exempt from this requirement.
In 2014, regulated financial institutions earned a weighted average of
$0.24 per debit transaction, and exempt financial institutions earned
$0.40, according to the study.
In addition to tracking debit interchange rates, the study also reports
on debit revenue, beginning in 2008. In that year, debit issuers earned
an average of $81 in annual interchange income per active consumer debit
card.
According to this year’s study data, exempt issuers generated average
annual debit interchange revenue of $112 per card. Regulated issuers
received average interchange income of $59 per card, with transaction
growth helping to offset a portion of the impact of lower
per-transaction rates.
“Debit continues to show resilience as a preferred payment type by
consumers,” said Sievert. “The study reveals that debit remains a key
source of non-interest income for both regulated and exempt financial
institutions at current interchange rates and card usage levels.”
Account acquisition, retention
For the first time, the study collected information on the rate at which
financial institutions acquire new account holders as well as lose
existing ones, since both influence the total debit card base.
Approximately one in five U.S. account holders switches financial
institutions each year.
In aggregate, the U.S. banking industry issues 165 million new debit
cards per year. The mass reissuance for data breaches and cards for new
customers are the two largest drivers of this demand.
About the study
The 2015 Debit Issuer Study is the 10th installment in the series
and was conducted by Oliver Wyman, an independent management consulting
firm. The study provides an objective fact base on debit card issuer
performance and financial institutions’ outlook for the debit card
business. Seventy financial institutions – including large banks, credit
unions and community banks – participated in the study. Collectively,
the participants issue approximately 147 million debit cards,
representing approximately 47 percent of total U.S. debit transactions.
The sample is representative of the U.S. debit market in terms of
institution type, geography and debit network participation.
About PULSE
PULSE, a Discover Financial Services (NYSE: DFS) company, is one of the
nation’s leading debit/ATM networks. Financial institutions, merchants,
processors and ATM deployers across the United States and around the
world depend on PULSE’s comprehensive suite of products and services and
its commitment to providing exceptional client service, flexibility,
security and superior economics. PULSE also is a resource for debit
education, research and knowledge drawn from more than three decades of
industry experience. For more information, visit pulsenetwork.com.
View source version on businesswire.com: http://www.businesswire.com/news/home/20150806005068/en/
Source: PULSE
PULSE
Patty Sendelbach, APR, (832) 214-0395
patty.sendelbach@pulsenetwork.com