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Debit Remains Strong in Digital Payments Landscape

A PYMNTS Interview with PULSE CEO & President Dave Schneider

Over the past several years, consumers have increasingly embraced e-commerce, mobile wallets, peer-to-peer payments, and other digital-commerce payment methods. Amid this growth, debit has proved to be surprisingly resilient.

In a February 2023 interview, Dave Schneider - then PULSE President - spoke about these and other trends with PYMNTS CEO Karen Webster.

PULSE President Dave Schneider discusses digital payments and debit popularity

Digital payments are here to stay

Many consumers discovered digital payments out of necessity during the pandemic, but we’ve also seen those habits stick, Webster noted. 

“All the benefits that come from digitally transacting in a card-not-present world are going to continue to be important to consumers,” Schneider said. Despite growing digital payment adoption, he noted two key areas of focus for payments providers in their effort to support consumers:

1. Education and comfort

A 2023 Datos Insights report1 revealed that Gen Z and young millennial consumers pay, respectively, 33% and 29% of their bills using debit, compared to only 15% for younger baby boomers and 7% for older baby boomers and seniors.

“There’s a real opportunity to continue to educate folks to understand what their options are,” said Schneider.

2. Confidence and trust

According to Schneider, traditional payment rails remain successful because they deliver clear benefits. Examples include chargeback rights, disputes, rewards, and customer service. He sees the confidence and trust these benefits impart as an important differentiator. 

Consumers take for granted the value of the rights they have under Regulation E, he stated. “The right to dispute payments, and the protections and customer service that come with that… these are important things to stress.”

The debit industry has invested significantly in fraud detection and risk mitigation, and consumers need to be made aware of those efforts. “We’ve fine-tuned our DebitProtect® tools for the card-not-present environment. We’ve had a lot of success with that.”

PULSE also has enhanced its dispute system and processes to benefit consumers, merchants, and issuers. The network introduced pre-dispute arbitration and aligned its rules to provide a consistent experience across different networks. 

“Our job as a network is to enable capabilities and let consumers and merchants choose what works best for them.”

Dave Schneider, PULSE President

Consumer behavior is slow to change

When asked by Webster about payment cards’ staying power, Schneider indicated he believes they will remain the dominant way to pay for 3 to 5 years. “One of the hardest things is to convince large numbers of consumers to change ingrained behavior,” he said.

The 2023 PULSE Debit Issuer Study revealed substantial gains in contactless issuance, but less so in usage. More than 70% of cards had been converted to contactless technology, but contactless comprised 16% of debit transactions in 2022. While that figure is rising every year, many consumers find it easy to continue do things the old way. 

“Cards are a way for consumers to think about how they choose to pay,” Schneider noted. He explained that the payment method consumers choose is tied to the environment in which they’re paying. They may tend to use debit for groceries and pharmacy purchases but credit in other environments, for example.

“Our job as a network is to enable capabilities and let consumers and merchants choose what works best for them.”

A payment method with staying power

“We have been amazed at the resilience of debit,” Schneider concluded. “During the financial crisis in 2008, debit became stronger. We attributed that to the fact that, in times of stress, consumers become more careful about spending, and debit facilitates that.”

To learn more about how PULSE can support your electronic payment needs, connect with your Account Executive or a PULSE debit expert.

For more information about the consumer trends driving the debit industry, download the 2023 PULSE Debit Issuer Study white paper

1 How Americans Pay Their Bills: Sizing Bill Pay Channels and Methods, 2023 Edition, October 2023, Datos Insights.