Consumer preference for the ease and convenience of debit transactions has continued to strengthen. Debit card penetration hit historic levels while issuers responded with more digital-first solutions.
Indeed, debit remains the preferred form of payment for everyday transactions, demonstrating strong year-over-year growth in both volume and value of total transactions, according to the 17th annual PULSE® Debit Issuer Study. The study is a comprehensive annual survey of financial institutions that offer debit programs.
Issuers focus on digital solutions that enhance experiences
Post-pandemic consumer preferences still drive the digital initiatives of many issuers as they look to meet the demands of a digital-first world. The study confirmed that consumers expect the same experiences from their banks as they find in other digital environments. To stay competitive, issuers continue to invest in digital initiatives and solutions that support debit and enhance user experiences in multiple channels.
“Issuers continue to reinvent debit in ways that increase consumer confidence. The reliability of debit is clearly keeping the payment method top of wallet for consumers.”
Steve Sievert, PULSE Executive Vice President, Marketing and Brand Management
“Digital-only brands have raised the bar, and issuers have to step up their game when it comes to delivering on consumer expectations,” said Steve Sievert, PULSE Executive Vice President, Marketing and Brand Management.
The study shows that a key priority for issuers is offering solutions to enhance self-service options available to cardholders, who widely prefer managing their debit activity through mobile and online channels. Consumers also seek to retain more control over their accounts, including responding to suspicious account activity. All the issuers in this year’s study reported offering their cardholders real-time push notifications about questionable transactions, and 92% also allow cardholders to respond to those alerts.
Stronger debit KPIs tied to continued digital trends
Debit KPIs for issuers also edged higher in all categories in 2021, as issuers retained a positive outlook for debit. For the first time, debit card penetration, which is the percentage of checking accounts that can be accessed with a debit card, exceeded 80%. The active card rate rose slightly to nearly 68%, while the average ticket increased by 9% year-over-year. The study revealed that rising in-store purchases and inflation propelled the increase in the average ticket.
Overall, the Debit Issuer Study finds that debit proves to be vital to financial institutions and consumers thanks to its convenience, security and ubiquity. “Issuers continue to reinvent debit in ways that increase consumer confidence,” Sievert said. “The reliability of debit is clearly keeping the payment method top of wallet for consumers.”
Strong growth in debit is propelled by card-not-present transactions
Much of debit’s growth also can be attributed to the impact of the pandemic as shoppers avoided cash in-store in favor of contactless payment methods, and card-not-present (CNP) transactions soared with the preference for e-commerce.
Increasingly, the study shows consumers turned to debit to complete CNP transactions for everyday purchases as well as for paying bills. Debit transactions grew by 5% year-over-year, while the dollar value of transactions showed a 9% increase. In 2021, CNP transactions amounted to 33% of all transactions, up from 31% in 2020.
The fastest-growing segment of debit is Account-to-Account (A2A) transactions, which revealed an explosive growth rate of 38%. Consumers increasingly use their debit cards with this option to transfer funds quickly and easily between accounts using peer-to-peer (P2P) apps to pay family, friends and colleagues. In fact, nearly 50% of consumers have sent or received funds using a P2P app or similar service.
Visit here to read the full results of the 2022 PULSE® Debit Issuer Study – including statistics, insights and other details.