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Debit Volume Exceeds Credit, Visa Says

Offline trend catches up with online e-commerce.

It was one of those "Rub your eyes - can we see the data one more time?" type of moments, relates Nancy Sabol, vice president of consumer debit products, Visa International (San Francisco). For the first time, debit transaction volume has exceeded credit transaction volume for e-commerce transactions cleared through the Visa network. Debit already outshines credit in the offline world, and now the same pattern is manifesting itself online.

In the first quarter of 2005, 52 percent of e-commerce transactions used debit cards versus 48 percent on credit cards. While the dollar volume of e-commerce spending still favors credit (at 59 percent), online consumer trends are showing a definitive move away from 30-day revolving accounts toward pay-as-you-go spending.

To explain the shift to debit, Sabol points to a recent Forrester Research (Cambridge, Mass.) study that notes that one-fifth of online shoppers have been online for less than a year. Also, she notes, Visa has been promoting the security features of the card in its national advertising campaign. "That's resonating with customers and pushing them online," said Sabol.

By demonstrating customer adoption of online debit, Visa views the milestone as an opportunity to expand acceptance of its debit card across a greater number of merchant channels, according to Sabol.

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