Digital Transactions Driving Growth in Debit, Survey Shows

Debit card use and market penetration continued to grow last year, while fraud losses declined, according to Pulse’s debit issuer survey released this morning. Americans conducted 68.5 billion debit transactions in 2018, a 6.7% rise from the year before. Digital transactions—that is, card-not-present purchases—grew 24% year-on-year, more than five times faster than in-person card transactions, and now account for a quarter of all debit purchases.

Meanwhile, the rate of checking accounts with associated debit cards ticked up two points to 78 percent, while the share of debit cards used at least once per month rose one point to 67 percent. Active debit card users on average made 24.8 purchases per month, up from 23.7 in 2016. The average net fraud loss per debit transaction declined for the third straight year, dropping from 1.3 cents to in 2017 to 1.1 cents in 2018. The year-over-year decline was driven by a 31% reduction in net fraud on signature-verified transactions, while net fraud on PIN-verified transactions and card-not-present purchases remained unchanged.

Looking forward, while just 10% of issuers already deploy contactless debit cards, an additional 70% plan to within the next two years—double the number in the 2017 survey. Issuers’ past expectations about mobile wallets have not panned out, however, as digital wallets like Apple Pay account for only 1% of 2018 debit transactions—versus the 58% share projected by issuers five years prior. While 94% of issuers support at least one third-party mobile wallet, usage rates remain low—an enrolled customer makes between 1 and 1.5 transactions per month using a given wallet, Pulse found.

“Looking ahead, we expect the debit landscape to continue to evolve as issuers enhance anti-fraud measures, respond to changing consumer payments behavior and meet the consumer expectation of a frictionless payments experience,” commented Steve Sievert, EVP at Pulse, which is a Discover company. The American Bankers Association endorses the signature debit product offered by Discover.