More US consumers are using debit for more transactions and are spending more in the process. The 2024 PULSE Debit Issuer Study, commissioned by Discover Financial Services and conducted by Banking & Payments Group, finds the total number of debit cards, transactions, and annual spend per active card all increased in 2023.
Card-Not-Present transactions account for 45% of debit spend; 38% of debit cards are loaded into mobile wallets.
“The ease and convenience of debit has made it a cornerstone of the retail banking customer experience,” said Steve Sievert, executive vice president of Marketing and Brand Management with PULSE.
“With active cardholders now using debit for more than 400 transactions per year, a debit card serves as a daily reminder of the value of the relationship between a consumer and their financial institution.”
Debit Used Daily
The 2024 Debit Issuer Study found the number of debit transactions is growing faster than spend.
Active cardholders completed 34.6 transactions per month in 2023, including 30.7 point-of-sale (POS) transactions, 2 account-to-account transfers, and 1.9 ATM transactions.
POS use grew at an average annual rate of 4.4% between 2018 and 2023.
The average debit ticket size was $46.89 in 2023, an increase of 3.4% per year, on average, over the period.
Annual spend per active card was $17,274, up an average 8.1% per year between 2018 and 2023.
Issuers reported a penetration rate (percentage of accounts with an associated debit card) of 80.5%, improving by an average 0.6% per year between 2018 and 2023.
Debit card active rates (the percentage of debit cards used regularly) declined slightly (-0.2% per year) over the period to 66.3% in 2023.
Card-not-Present (CNP) Gained Share
US consumers continue to adopt new ways to use debit, including without a physical card.
Issuers reported that CNP transactions accounted for 36% of transactions and 45% of debit spend in 2023, an increase of 5.2% year-over-year (YOY). The average CNP ticket size increased 2.8% YOY to $60.81.
Mobile and Digital Trends
Mobile devices originated 7% of all transactions and 15% of in-store contactless payments in 2023.
While all surveyed issuers support provisioning debit cards into digital wallets such as Apple Pay and Google Pay, 38% of cards are actually loaded into digital wallets.
Apple Pay remains the most popular digital wallet.
Issuers reported an average of three digital wallet transactions per active card per month in 2023, with an average value of $27.69.
This is approximately 40% lower than the overall average ticket, reflecting a mix of small-ticket in-person payments and small in-app purchases.
Digital issuance, through which an institution pushes card credentials directly to the digital wallet prior to physical card issuance, is the number one new capability issuers plan to introduce.
Half of issuers reported plans to add digital instant-issuance capabilities. Benefits of digital issuance include superior convenience, no lag to use, and significant cost savings for the institution.
Shifting Dynamics
In addition to benefiting from debit’s continued growth and evolution, issuers are responding to three macro trends impacting debit:
A pending reduction in Regulation II’s interchange cap for covered issuers (those with $10 billion or more in assets).
Increased competition from both traditional institutions and digital challengers.
The potential impacts of real-time payments growth.
As issuers respond to these developments, they revealed three key priorities for the remainder of 2024 and into 2025:
Continue to optimise penetration, active, and usage rates.
Strengthen their fight against fraud.
Invest in new digital capabilities, such as instant digital issuance and cardholder visibility into recurring payments.
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