US consumers are increasingly turning to debit cards for their everyday transactions, driving a significant surge in the number of transactions and overall spending.
The 2024 PULSE Debit Issuer Study reveals that in 2023, the total number of debit cards, transactions and annual spending per active card all saw substantial increases.
Commissioned by Discover® Financial Services’ PULSE debit network and conducted by Banking & Payments Group, the study gauged insights from large banks, credit unions and community banks.
On average, active debit cardholders completed 34.6 transactions per month, including 30.7 point-of-sale (POS) transactions, two account-to-account transfers, and 1.9 ATM transactions. Notably, POS usage grew at an annual rate of 4.4 per cent between 2018 and 2023, highlighting the increasing reliance on debit cards as a preferred payment method.
Card-not-present (CNP) transactions, which include online and digital purchases, also saw significant growth. In 2023, CNP transactions accounted for 36 per cent of all debit transactions and 45 per cent of debit spending, marking a 5.2 per cent year-over-year increase. The average CNP transaction amount rose to $60.81, indicating a shift in consumer behaviour towards digital payment methods.
“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.”
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Mobile devices were responsible for seven per cent of all debit transactions and 15 per cent of in-store contactless payments in 2023. Despite widespread support for digital wallets, only 38 per cent of debit cards are currently loaded into digital wallets such as Apple Pay, indicating room for growth in this area.
Issuers reported an average of three digital wallet transactions per active card per month, with an average value of $27.69 – approximately 40 per cent lower than the overall average debit transaction size, reflecting a mix of small-ticket in-person payments and in-app purchases.
As debit usage continues to grow, the study also highlights emerging challenges and opportunities for issuers. These include the need to adapt to new regulatory changes, such as a potential reduction in Regulation II’s interchange cap for larger issuers, and the rising competition from both traditional financial institutions and digital challengers.
To stay ahead, issuers are prioritising the optimization of card penetration, activity, and usage rates, while also investing in new digital capabilities like instant digital issuance and enhanced fraud prevention measures.
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