2023 PULSE® Debit Issuer Study: Consumers Want Convenience, Security, Control


Annual survey shows issuers are driving growth by keeping pace with consumer preferences

Consumers increasingly want to feel empowered to manage their funds and make purchases conveniently and securely. That’s why debit-card issuers are investing heavily in technology aimed at helping cardholders save time and take control of their finances.

Issuers’ use of new technology to upgrade the customer experience is among the main takeaways from the 2023 PULSE Debit Issuer Study, commissioned and published by PULSE, a leading debit and ATM network. Now in its 18th year, the study is based on both quantitative and qualitative information gathered from U.S. debit issuers and focuses on topics such as debit program performance, digital payments and industry disruptors.

Industrywide, the survey found that the number of debit-card transactions grew at a more stable pace following the impact of COVID-related trends. In 2022, transaction volume increased 1% from the prior year, according to the study.

While the overall level of activity remained relatively constant, a deeper dive into the data reveals rapidly changing consumer preferences that are driving issuers to speed up transactions, educate consumers about the threat of fraud, bolster their fraud defenses and enhance the digital experience for cardholders.

Steve Sievert, Executive Vice President – Marketing and Brand Management at PULSE, said debit remains a preferred payment method among consumers, largely because of its versatility and ease of use.

“Debit cards provide convenience, security and control in ways that other payment types can’t,” Sievert said. “As a result, debit represents an opportunity for issuers to remain top-of-mind with consumers.”

With mobile wallets and contactless payments on the rise, issuers are streamlining the payment process, Sievert said. Issuers are also promoting debit-card usage to bolster customer engagement and satisfaction.

“When you think about the number of debit transactions the average consumer makes each month, that’s the most frequent touchpoint that a financial institution is going to have with its customer,” he added. “It’s a great opportunity to reinforce the brand value that financial institutions deliver and promote opportunities for their customers.”

Consumers like using a debit card instead of cash, which can easily be lost or stolen, Sievert said. Consumers also want the ability to split a restaurant check with their friends quickly and easily without having to ask a waiter for change.

Among the additional benefits are flexibility and convenience. If customers do fall victim to fraud, for example, cardholders want to be able to use a smartphone app to take immediate action, Sievert added. Enabling consumers to report a card stolen or compromised, shut off purchases, change their PIN or limit the daily dollar amount of withdrawals and purchases gives them more confidence in using their debit card, he said.

The instant issuance of physical and virtual debit cards when opening an account is also a way that issuers are encouraging cardholders to use their debit cards more often.

By offering more convenience, security and control, issuers can drive brand loyalty and maintain top-of-wallet status with consumers, a key consideration given that active debit cardholders performed an average of 29 transactions per month in 2022, according to the PULSE study.

Customers adjust their spending

Recently, consumer spending with debit seesawed amid the COVID-19 pandemic. The number of debit transactions in 2020, for example, dipped 2.5% from the prior year, the first decline in the study’s history, before increasing 5% in 2021.

This new data show that transactions ticked up 1% last year, with the value of those transactions edging up 3%. With the 3% dollar-volume increase in debit spend coming in below last year’s 6.5% inflation rate, consumers appear be adjusting their debit-spending habits in response to an erosion of their purchasing power, Sievert said.

When customers do make a purchase, they’re increasingly opting for new payment technologies that speed up transactions. Almost 80% of issuers reported seeing a noticeable increase in mobile-wallet transactions in 2022, according to the PULSE study.

Mobile-wallet usage nearly doubled in 2022 from the prior year, representing almost 10% of total purchase transactions. The rapid growth was driven by consumers’ increased awareness of mobile wallets as a payment option and a sharp uptick in wallet-enabled payment terminals among merchants, according to the study.

Issuers align with consumers’ preferences

In response, issuers are prioritizing efforts to enable and promote mobile-wallet use, the study found.

“Mobile is beginning to have its moment,” Sievert said. “There’s a significant shift in terms of consumers taking advantage of frictionless payment opportunities. Consumers are often strapped for time, so every moment counts, and getting through the checkout line more quickly because of contactless technology is a benefit to consumers.”

Last year, 68% of debit purchase transactions were made with the card present at the physical point of sale, while 32% were made online, according to the PULSE study. Of the card-present transactions, 16% were contactless, which can be up to 10 times faster than EMV/chip transactions.

EMV chip card transactions accounted for 64% of in-person debit purchases in 2022, down from 71% in 2021, reflecting consumers’ growing preference for contactless payment, according to the study.

Issuers appear to know that if they don’t extend that convenience to cardholders, they risk getting bumped to the bottom of the wallet. In 2022, the percentage of U.S. debit cards equipped with contactless capabilities increased to 70% from 56% in the prior year, a marked increase for a single year, according to the PULSE study.

Issuers that have made substantial progress in their contactless initiatives reported that it was one of their most impactful improvements in 2022, the study found. Now, they’re shifting their focus toward promoting the solution to underscore the value of contactless technology in the industry.

“We’ve reached a point where having contactless capabilities on a card is table stakes for financial institutions,” Sievert said. “Smaller financial institutions may still be on the journey in issuing contactless cards, but within the next few years, it’s likely that virtually every debit card in the country will be enabled with contactless technology, because consumers are expecting it.”

Innovation at ATMs

With contactless and digital-wallet purchases surging, issuers are also turning to near-field communication (NFC) to upgrade their ATMs. Once cardholders have added their debit card to their digital wallet, they can use smartphones to withdraw money from ATMs equipped with NFC technology. They no longer need to use a physical card.

Approximately 17% of issuers said they’ve deployed NFC technology to at least some of their ATMs, though the share of ATM transactions that used this technology remained relatively low at 12% last year, according to the PULSE study. But trend lines clearly point to an increase, Sievert said.

“Issuers want to provide that consistency of experience across their payments ecosystem by adopting NFC technology at their ATMs,” he said. “It’s adding more convenience for the consumer.”

A2A transactions still rising

The number of account-to-account (A2A) debit transactions grew 6% in 2022, outpacing the overall growth of debit transactions, as consumers increasingly use those methods to transfer money to family, friends and business associates, according to the PULSE study.

Those types of account-funding transfers represented 63% of A2A transactions in 2022, with the remaining 37% being original credit transactions, also known as account credit transfers, such as direct-deposit payments, business payments to gig-economy workers and government benefits paid to consumers, the study said.

Overall, A2A growth decelerated last year after surging 60% in 2020 and 38% in 2021, perhaps suggesting the adoption has matured among consumers as payment providers have simplified and streamlined digital A2A transfers. It could also signify that consumers have embraced the convenience and security of digital channels, such as Venmo, Cash App and PayPal – even for transferring large sums of money, the study found.

“With any new form factor, there’s going to be a little leveling off after periods of explosive growth, but it’s clearly still increasing,” Sievert said. “This is still a growth area that issuers need to be focused on to drive brand loyalty among cardholders.”

Cardholder demographics remain steady

As in past years, cardholders aged 18 to 24, many of whom lack access to credit, use their debit cards more often than any other age group, the study found. While that age group transacts more often, consumers aged 45 to 64, who typically enjoy greater purchasing power, account for the largest share of debit spending, according to the PULSE survey. (Consumers aged 25 to 44 show debit-spending patterns similar to their older peers.)

For issuers, the active engagement of younger cardholders is an opportunity to drive growth and brand loyalty. Because of this, issuers continue to seek ways to appeal to younger consumers, recognizing that when they form a deeper connection to the brands they use, those relationships could last a lifetime.

Among the areas that issuers have focused on is enhancing the digital experience through smartphone apps. Similarly, issuers have begun incorporating educational games and resources about money management into their platforms, and most have ramped up their self-service offerings, enabling consumers to request a new card or make changes to their account quickly and easily, the study found.

Younger consumers enjoy receiving phone notifications when their account balance dips below a preset threshold, and they’re interested in digital reporting tools that provide insights into their spending patterns, according to the PULSE survey.

In addition, with interest rates on credit cards spiking in the past year, debit cards help younger customers avoid building debt. With that in mind, issuers are encouraging cardholders to use their debit cards for the automatic payment of recurring bills such as streaming services, phone service and utilities.

Combatting fraud remain top-of-mind

With the increasing shift of transactions to online and other card-not-present methods, fraud remains a top concern of issuers. Addressing the threat of fraud and account hacking was cited by 90% of issuers as their top priority, according to the PULSE study.

Given the rise of e-commerce and other remote payments, online transactions accounted for 64% of issuers’ fraud losses in terms of monetary value, while in-person transactions represented just 26%, and ATM withdrawals made up 9%, according to the PULSE study.*

Fraudsters increasingly are turning to social-engineering tactics to target younger cardholders and high-value items.

At the same time, issuers are making progress in combatting fraud. The number of fraud cases has declined, as have losses stemming from cases where issuers denied claims or efficiently processed chargebacks, according to the survey. In all, 40% of issuers improved their dispute-resolution experience to make it easier for customers to handle fraud issues, the study found.

Empowering cardholders to recognize suspected fraud and act immediately is helping issuers stem the tide. Last year, 76% of issuers enhanced their fraud models, using algorithms to detect suspicious activity and alerting customers via text or email so they can either confirm their purchases or flag them as fraudulent. Along with push notifications about suspicious transactions, issuers are producing education materials to teach consumers about the risks.

“Financial institutions should deputize consumers and make them part of the solution in identifying and responding to fraud,” Sievert said. “Issuers are focused on self-service options to keep cardholders engaged and informed.”

To download the full 2023 PULSE Debit Issuer Study, visit PULSE here.

* Numbers do not add to 100 due to rounding.