Study: Expect sustained debit transaction growth

HOUSTON (6/5/09)--Credit unions can expect a sustained debit transaction growth despite the recession, according to a new study that identifies several positive trends for credit union and other issuers of debit cards.

The 2009 Debit Issuer Study, commissioned by PULSE, also found that the use of personal identification number (PIN) debit has increased, while fraud loss rates for debit transactions has declined (BUSINESS WIRE June 4).

Debit issuers surveyed saw an 8% debit transaction growth during the second half of 2008. That growth includes 15% growth in PIN debit transactions and 4% growth in signature debit. Those surveyed predicted growth in 2009 at 7% for each of the PIN and signature debit transactions.

"Debit card use is expected to continue to grow as the economy bottoms out and begins to recover, because consumers use their debit cards for a large portion of necessary everyday expenses," said Cindy Ballard, PULSE executive vice president.

More than one-fourth (27%) of all debit transactions last year were for less than $10. "In most cases, these transactions are replacing cash, highlighting a clear consumer preference for electronic payments," Ballard said.

Penetration--the percentage of eligible accountholders who have a debit card--remained flat--at 73%. Using an expanded definition of "active" debit cards, the study found the number of issued cards used actively was 66%.

PIN debit accounted for 35% of debit transactions in 2008--up from 34.2% in 2007. The average amount debited was $42 for PIN debits and $37 for signature debits. Both figures declined by roughly $1 from the year before. Active debit cardholders made on average 17.3 point-of-sale transactions per month, compared with 16.6 transactions a month in 2007.

Debit card fraud losses at the point of use declined in all categories. PIN losses (in dollars per card) fell to $0.15 from $0.19. ATM losses declined to $0.56 per card, from $0.61. Signature card losses dropped to $1.81 from $1.92. Although losses for all three usage points declined year-over-year, the survey recorded an increase in share for the ATM losses, to 38% of total debit fraud losses last year. That is up from 25% in 2007.

Other findings:

Active debit cardholders averaged three ATM transactions a month, down from 3.4 in the previous survey;
More than half (53%) of issuers participate in a surcharge-free ATM network, down from 56% in 2007. And 43% offer ATM surcharge reimbursements to at least some cardholders.

Bill payments represented 10% of signature debit transactions, compared with 7% in 2007.

The percentage of debit card issuers offering debit rewards rose two percentage points to 53% this year.

Roughly 37% of debit card issuers offer mobile banking, compared with 15% in 2008, and 38% said they plan to introduce it soon, up from 28% last year.

courtesy of cuna.org