The use of debit cards has grown rapidly in recent years, as consumers have become increasingly aware of the benefits they offer. Debit cards allow users to access their bank account funds immediately, without having to wait for a check to clear or for a loan to be approved. In addition, debit cards are extremely convenient, as they can be used anywhere that credit cards are accepted. Finally, debit cards offer a degree of security that is not always available with other forms of payment, such as cash or checks.
Don’t miss another episode of Truth In Data! Click on the red bell in the lower-left corner of your screen to receive notifications as soon as the episode publishes.
Data for today’s episode is provided by Mercator Advisory Group’s report – 2021 Outlook: U.S. Debit Cards and Alternative Products
2020’s Debit Card Performance at a Glance:
- Year-over-year growth of debit card dollar volume spend was anticipated to be in the range of 6-8% from 2019 to 2020. That prediction appears to be holding for most issuers, and some are reporting even higher growth.
- How the market achieved that growth was unexpected. Rather than steady, organic growth, debit volumes plummeted in March and early April, followed by rapid growth from three sources:
- The $270 billion in federal economic stimulus payments sent in mid-April.
- Disbursement of state and federal unemployment benefits
- A significant shift from credit cards to debit cards.
- Q1 through Q3 volumes spent on debit cards grew at a rate of 7% in 2020 when compared with 2019, while transaction growth was only 3% for the same period.
- Consumers consolidated their shopping trips, bought more goods at fewer locations, and bumped up the average debit card transaction to over $40 from an industry average of approximately $36.
- Contactless card use increased more significantly than anticipated as tap-and-go transactions became more than just a novel way to check out.
- P2P app use, predicted to moderate given its maturity, skyrocketed as more consumers looked for cash-free and remote options to make payments to other individuals and small businesses.
About Report
The events following the onset of the global pandemic helped to crystalize consumer attitudes regarding payment habits.
The progression of digital payments, contactless options and the momentum achieved by faster and real-time payments shone a light on the path these payment types would take as they leapfrogged in development and use by two to three years in the span of just a few months. The pandemic gave users a reason, beyond technology for the sake of technology, to adopt these payments.