2020 debit volumes surpassed credit for first time

Debit card usage in the United States didn't escape the deleterious effects of the COVID-19 pandemic last year. That didn’t stop debit card usage from achieving some noteworthy results, however. While the number of debit card transactions fell in 2020, total debit spend increased as cardholders made fewer, but larger purchases. This is according to the 2021 Debit Issuer Study conducted by Oliver Wyman and published by PULSE.

Not surprisingly, in-store spending shrank while debit for online purchases exploded, and when debit cards were used at the physical POS, it was often a contactless transaction. Card-not-present transactions per active cardholder grew 23 percent last year, and CNP transactions now account for one in three debit card payments, PULSE reported. Card-present debit transactions fell 10 percent per active user.

All in all, debit cards remain consumers’ preferred payment method, representing 51 percent of all non-cash payments in 2020. “While credit card volumes contracted, debit spending was resilient in 2020. As a result, debit purchase volumes surpassed credit purchases for the first time,” the report stated.

Overall transaction volumes fell in the second quarter of 2020 (after the pandemic was declared), resulting in total debit spend contracting by 2.5 percent for the year, the first time that’s happened in the 13-year history of the PULSE debit issuer study. That was buffered by a $4 boost in average ticket size, the largest increase in the study’s history.

By the numbers

Here are additional key debit card usage trends in 2020, as revealed in the PULSE survey report.

• Total debit spend last year (including prepaid debit) surged 8 percent over 2019 to total $3.4 trillion.
• The average debit card ticket jumped by 10 percent, to $44.80 from $40.50 in 2019.
• Average spend per active debit card user grew 9 percent, and the typical debit card is now used for $13,550 in annual spend.
• The total number of consumer debit cards fell by 0.4 percent, while the business debit card base grew by 2 percent, buoyed by new demand deposit accounts opened to support Paycheck Protection Program loans.
• Debit card issuers subject to the Federal Reserve regulation capping interchange on average grossed $71 per active card per year, a 7.2 percent increase over 2019.
• Among issuers exempt from the Fed’s debit interchange caps, average gross revenue per active card was $132, a 33.5 percent increase over 2019.
• Contactless debit card penetration nearly tripled in 2020, at 30 percent of all cards issued compared to 11 percent in 2019.
• About a third of contactless debit cardholders performed at least one transaction using that feature last year.
• The number of contactless debit transaction was up six-fold, year-over-year, but still represents just 1.6 percent of total debit volume.
• Mobile wallet payments using debit cards totaled 2.0 billion, reflecting 51 percent growth across the three most prominent wallets, Apple Pay, Samsung Pay and Google Pay.
• The average ticket size for debit card payments initiated through mobile wallets rose 55 percent, to $23; it was $15 in 2019.
• ATM transactions per active debit card were down 19 percent. Some debit card issuers saw declines as large as 60 percent.

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