Pulse announced the availability of their latest report on the U.S. debit market. They have been conducting this report for 16 years which creates a great repository of data to follow trends. Certainly, the debit activity of the last year has been anything but typical.
While we all know that more transactions migrated to card-not-present channels, and the number of transactions went down while dollar volumes went up, there were also some data points in this report that aren’t readily available elsewhere. For example, contactless debit card transactions increased six-fold among the financial institutions that participated in the Pulse study, but still represent just 1.6% of all debit activity, so there is plenty of room to grow.
Here are some more highlights from the 2021 Debit Issuer Study:
Contactless Payments – The rollout of contactless debit cards is well underway, with contactless penetration jumping from 11% of all debit cards in 2019 to 30% in 2020. Of cardholders with contactless cards, issuers report one-third (33%) used the capability. The study projects contactless cards will make up 64% of all debit cards by the end of this year. While the number of contactless debit card transactions at tap-and-go terminals increased six-fold year-over-year in 2020, such transactions still make up less than 2% of all debit transactions.
Mobile Wallets – Approximately 2 billion debit transactions were completed using the three major mobile wallets – Apple Pay, Samsung Pay and Google Pay – in the U.S. in 2020, a year-over-year increase of 51%. Apple Pay expanded its lead over the other two wallets, accounting for a noteworthy 92% of these transactions. The average ticket size of debit mobile wallet transactions jumped from $15 in 2019 to $23 in 2020.
Money Transfers – Account-to-account (A2A) money transfers using debit are booming. These payments encompass peer-to-peer transfers, business-to-consumer transactions such as payments to gig-economy workers, and cardholders funding their digital-wallet accounts. A2A transactions per active debit card per month jumped nearly 60%, building on 100% growth in the prior year. The average active debit cardholder made about one monthly A2A debit transaction in 2020. Peer-to-peer solutions such as Venmo, Cash App and Zelle®, are the main driver of A2A volume.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group