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Data for today’s episode is provided by Mercator Advisory Group’s report – Debit Card Abruptly Finds Itself Top of Wallet
Shifts in U.S. Card Volumes Favor Debit:
- For Mastercard and Visa, combined Q2 2020 credit and debit purchase transactions are down year over year.
- In addition, tHE Q1 2020 decline was greater than the typical post-Christmas seasonal decline.
- For debit, these declines have been far less pronounced (5.8% 2019 to 2020) compared to credit’s 22.5% decline since 2019.
- The most revealing declines occurred in dollar volume: credit purchase volume declined 21.2%, compared to debit’s INCREASE of 8.6%.
- In just the space of two quarters (Q4 2019 to Q2 2020), credit cards went from a 53.6% share of purchase volume to a 44.7% share as debit volumes grew.
- Average transaction size increased for both credit and debit, although debit’s growth has been more dramatic, up 16.7% year over year in Q2 2020 versus 1.7% for credit.
- Note that this analysis excludes volumes associated with American Express and Discover-branded cards, which are primarily credit and charge accounts.
In the continuing cycle of firsts and “unprecedented” events experienced during the global pandemic and the associated economic recession of 2020, the U.S. card market is currently experiencing a first of its own. Mastercard and Visa debit card transactions and dollar volumes are greater than those conducted on credit cards as explored in a new report, Debit Card Abruptly Finds Itself Top of Wallet. As consumers stare down potentially months of necessary household spending restrictions, they are relying on their debit cards much more, putting issuers in a new operating environment.
“We anticipate that changes in consumers’ payment habits, largely driven by the COVID-19 pandemic, are likely to continue long term, if not become permanent routines. While the credit card market is being challenged, debit cards are now at an advantage and debit issuers will want to take steps to insure they retain this position,” comments Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group and author of the report.