Even with the recession, debit cards are showing their resilience. According to the 2009 Debit Issuer Study, commissioned by payments network PULSE (Houston) and conducted by New York-based Oliver Wyman, debit card transactions are still showing signs of growth. In addition, use of PIN debit has increased while incidents of fraud have decreased.
Issuers surveyed experienced debit transaction growth of 8 percent in the second half of 2008. This consisted of 15 percent growth in PIN debit transactions and 4 percent growth in signature debit. Survey participants predicted 7 percent growth each for PIN and signature debit in 2009. Furthermore, more than a quarter of all debit transactions (27 percent) were for less than $10. PULSE attributes this growth to an increasing preference by consumers to not use cash.
PIN debit accounted for 35 percent of debit transactions in 2008, up slightly from 34.2 percent in 2007. In addition, active debit cardholders performed 17.3 point-of-sale transactions per month, on average, compared to 16.6 transactions per month in the 2008 survey.
Debit card fraud losses at the point of use declined in all categories. PIN point-of-sale losses, as measured in dollars per card per year, fell to $0.15 from $0.19. ATM losses declined to $0.56 per card per year from $0.61, and signature debit loss rates fell to $1.81 from $1.92. Although losses at all three usage points declined year-over-year, the survey did record an increase in share for ATM losses, to 38 percent of total debit fraud losses in 2008 from 25 percent in 2007.
"The 2009 study uncovered several reasons for optimism among financial institutions that issue debit cards," noted Tony Hayes, an Oliver Wyman partner, in a statement. Hayes served as project lead on the study. "Among them, debit card-based bill payments account for a small but rapidly growing share of debit card payments, a market with significant potential for growth in the coming years."