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Debit Card Transaction at All-Time High, ABC Reports

With debit card transactions reaching all-time highs, comes the debate as to whether debit spending is a reflection of consumer habits during recession or if it's a trend that transcends economic health.

With debit card transactions reaching all-time highs, comes the debate as to whether debit spending is a reflection of consumer habits during recession or if it's a trend that transcends economic health.

ABC News reported today that for the first time ever, MasterCard customers spent as much with debit cards as with credit cards during the last fiscal quarter. Further, ABC's examination of debit card usage showed Visa has seen debit card spending at higher rates than credit since 2008.

Today, Visa is the market leader in debit card transactions, registering more than $320 billion in U.S. business in the first three months of 2010 -- more than twice as much as its closest rival, MasterCard, which introduced its first debit card product in 1988. Visa's U.S. debit card volume first exceeded its credit card volume in December, 2008.

"Visa was an early mover and they built share in signature debit quicker than MasterCard, and they dominate today," said Thomas McCrohan, managing director of equity research at Janney Montgomery Scott LLC.

Among factors ABC notes as driving consumer use of debit cards are the idea of carrying less cash, using them as a budgeting tool and as a means to avoid unnecessary debt. An incentive for banks is that there could be less risk associated with issuing debit cards.

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