Card-not-present volume grew at 10 times the
rate of card-present in 2019, and issuance of contactless cards
nearly tripled
Card-not-present debit transactions surged 21% year-over-year in
2019, according to a new study commissioned by Discover Financial
Services’ PULSE® debit network and conducted by Oliver Wyman. The
2020 Debit Issuer Study found that one card-not-present transaction
type – account-to-account (A2A) transfers using debit – is the
fastest growing category of debit, doubling year-over-year and
accounting for 40% of total debit growth.
These increases reflect growth in consumer use of debit to shop
online, and to fund purchases and person-to-person transfers using
apps such as PayPal, Venmo and Zelle. In addition, more
business-to-consumer payments are being delivered via debit,
including insurance payouts and payments to gig-economy workers
such as drivers for ride-share services.
While the growth rate for card-present transactions was a more
modest 2%, these transactions still represent 73% of all debit
transactions.
“Debit is being used more often by more consumers, and in a
greater variety of ways than ever before,” said Jennifer Schroeder,
executive vice president of product management with PULSE. “This
year’s Debit Issuer Study shows that, even before the COVID-19
pandemic, debit use was growing in digital-commerce channels. This
growth was a key driving force behind the record 77.4 billion debit
transactions that were made in the U.S. in 2019, up a very healthy
6.5% year-over-year.”
The study, based on a representative sample of U.S. debit
issuers, determined that debit’s continued strength makes it more
important than ever to financial institutions (FIs). Approximately
25% of non-interest income for community FIs now comes from debit
interchange. Historically low interest rates, combined with debit’s
resilience, makes non-interest income from their debit programs
more important than ever.
Debit Continues Growing
Overall, debit transaction growth in 2019 was fueled by a
combination of a 3.1% rise in transactions per active card, a 2.3%
increase in the number of cards in market, and a 1.1% rise in the
number of cards used at least monthly by the cardholder.
The study found that, on average, cardholders performed 25.5
debit transactions per active card per month in 2019, including
purchases, bill payments and A2A transfers. Average ticket size
increased to $40.50 from $39.70 in 2018, and the typical debit card
is now used for $12,400 in annual spend, both of which represent
record highs in the study’s 15-year history.
Mobile wallet payments using debit cards in 2019 jumped 94%
year-over-year, reaching a record 1.3 billion transactions. Apple
Pay accounted for approximately 1.1 billion (85%) of those
transactions as it outperformed Samsung Pay and Google Pay, posting
100% growth year-over-year.
Pandemic Expected to Accelerate Trends
Changes in government guidance, business practices and consumer
behavior in response to the COVID-19 pandemic are expected to
accelerate the major shifts the 2020 Debit Issuer Study identified;
namely, rising card-not-present activity and greater issuance and
use of contactless debit.
“Card-not-present transactions already represent 27% of all
debit transactions and are growing about 10 times faster than
card-present transactions,” said Tony Hayes, a partner at Oliver
Wyman and study principal. “That growth will surely accelerate due
to a surge in e-commerce, and a shift in many traditional
card-present merchant categories, such as grocery and restaurants,
to remote card-not-present ordering.”
In addition to greater use of debit in card-not-present
environments, the average ticket size for these purchases is
considerably larger than a transaction made with a card. The
average card-not-present transaction totaled $61.48 in 2019, while
the average card-present purchase totaled $34.10.
The shift toward card-not-present transactions after the study
period can be seen in PULSE Network volume data reflecting the
impact of the pandemic, published periodically on PULSE’s Pandemic
Response Resource Hub.
Even prior to the pandemic, issuers participating in the 2020
Debit Issuer Study cited offering contactless debit cards as their
top priority. While 29% of respondents were issuing contactless
debit cards to at least some cardholders at the end of 2019 (up
from 10% at the end of 2018), another 37% expect to be doing so by
the end of 2020.
Based on issuers’ stated plans in early 2020, 87% of debit cards
are expected to be contactless by year-end 2022. Oliver Wyman
expects the issuance, acceptance and use of contactless cards all
to accelerate as a result of the COVID-19 pandemic, and contactless
transaction volume to increase accordingly.
Further study details are available at
https://www.pulsenetwork.com/public/debit-issuer-study.
About the Study
The 2020 Debit Issuer Study is the 15th installment in the study
series, commissioned by PULSE and conducted by Oliver Wyman, an
independent management consulting firm. The study provides an
objective fact base on debit issuer performance and financial
institutions’ outlook for the debit business. Fifty-five
institutions – including large banks, credit unions and community
banks – participated in the study. The participants collectively
issue approximately 157 million debit cards and represent 42% of
the U.S. debit market. 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
serves as a resource for debit education, research and knowledge
drawn from more than three decades of industry experience. For more
information, visit pulsenetwork.com. For insights into the latest
payments industry trends, visit Payments & You.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200810005004/en/
Anne Uwabor, 832-214-0234 PULSE anneuwabor@pulsenetwork.com Dan
Keeney, 832-467-2904 DPK Public Relations dan@dpkpr.com
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