|
Dove Consulting
For Immediate Release
January 8, 2004
For More Information
Denise LeGrow
617/482-2100
Both PIN and Signature Debit Get
Strong Support From Consumers
ABA/Dove Consulting study explores consumers’ use and understanding
of debit
WASHINGTON, January 8—A new nationwide consumer
payment preferences study conducted by the American Bankers Association
and Boston-based strategy consulting firm Dove Consulting documents
the growing popularity of debit cards. The study found that between
1999 and 2003, the number of consumers using debit cards to make
in-store purchases increased from 48% to 57% (for PIN-based purchases)
and from 42% to 54% (for signature debit purchases).
"All trends indicate that debit is an increasingly
popular form of payment at the point-of-sale, and this study validates
this phenomenon" said Cindy Ballard, Executive Vice President
of PULSE EFT Association, one of the study’s three sponsors.
Indeed, PULSE reported that its PIN debit transaction volume has
increased by more than 220% over this timeframe.
PIN vs. Signature Debit
Today, 94% of debit cardholders have a card with
either a Visa or MasterCard logo, meaning that (in most cases) they
have a choice at the point-of-sale whether to enter their PIN or
sign the receipt. Some consumers use their cards exclusively with
a PIN (19%), and other consumers are exclusively signature debit
users (14%), but the most consumers report using both forms of debit
(49%).
Given this choice between PIN and signature debit, both methods
have strong support from consumers. Overall, 45% of debit cardholders
prefer to enter a PIN when using their debit card for purchases,
as compared to 38% who prefer to sign a receipt. Only 17% of debit
cardholders said they did not have a preference for PIN or signature
debit when making purchases.
Debit Taking Share from Checks
and Cash
Increases in debit payments are steadily eroding
the use of cash and checks. In 1999, cash and checks together accounted
for nearly 60% of consumers’ in store payments, while debit
(both PIN and signature) accounted for only 21%. In 2003, 31% of
payments were made with PIN and signature debit, while less than
half (47%) were made using cash or checks. The percentage of payments
made using credit card remained stable over the timeframe.
"Consumers are migrating more and more of their payments from
cash and checks to debit cards," said Michael Feliciano, SVP
and division executive of electronic payments at eFunds Corporation.
"For a growing number of consumers, debit cards are their primary
or preferred payment mechanism—they use them for everything."
Carrots & Sticks
Many debit card issuers have begun to model debit
rewards programs after credit card programs, offering accumulated
points for air travel or perks, cash rebates, and sweepstake entries
to incent consumers to use their debit card over cash, checks, and
credit cards. However, only a small portion of consumers—less
than 10%—indicate that they currently receive rewards for
using their debit cards.
Which debit transactions—both PIN and signature debit or only
signature debit—are included in rewards programs varies by
issuer and depends on issuers’ debit philosophy. Of those
who indicated that they receive rewards for using their debit card,
44% receive rewards for both entering their PIN and signing the
receipt, while 46% receive rewards only for signing the receipt.
Most financial institutions do not charge a per-transaction fee
for debit, and the majority of banks who do levy a fee only apply
it to a subset of their customers. Despite issuers’ hesitancy
to levy fees, consumer confusion persists: 14% of debit cardholders
report that they incur a fee for PIN debit transactions, and 7%
indicate that they pay a fee for signature debit transactions.
Conclusion
"Whether it be PIN- or signature-based, debit
is supplanting other forms of payment, particularly cash and checks,
at an unprecedented rate," said Jeff Hale, senior vice president
and chief marketing officer at ACI. "Our U.S. customers are
seeing solid growth in their debit POS volumes, and the experience
in countries like Canada and the UK suggests that once the ‘knee
in the curve’ is reached, debit rapidly overtakes paper-based
methods."
As today’s younger consumers age, so the segment of the population
representing active and frequent debit users will grow. Combined
with new applications and new users, the market for debit payments
will continue to expand at double-digit rates for the foreseeable
future.
About the Study
The 2003/2004 Study of Consumer Payment Preferences
is the definitive guide to how consumers pay in different venues,
why, and how their payment habits are likely to evolve going forward.
This study provides insights into consumer behavior and preferences
across three important payment venues: retail point-of-sale (in-stores),
Internet purchases, and bill payments. Data for the 2003/2004 Study
was collected through a national paper and Web survey sent to consumers
in the United States. A total of 2,008 completed surveys were received,
and the data set is weighted to represent the overall population.
This study is the third in a series tracking consumers’ payment
habits, preferences and their migration from paper to electronic
payments.
The cost of the 2003/2004 Study of Consumer Payment Preferences
is $500 for ABA members and $1,500 for non-members. To order or
for more information, call 1-800-BANKERS or visit www.aba.com.
###
About the American Bankers
Association
The ABA brings together all categories of banking institutions to
best represent the interests of this rapidly changing industry.
Its membership— which includes community, regional and money
center banks and holding companies, as well as savings associations,
trust companies and savings banks makes ABA the largest banking
trade association in the country. ABA can be found on the Internet
at: www.aba.com.
About Dove Consulting
Dove Consulting is a Boston-based consulting firm specializing in
strategy and organizational effectiveness. The firm’s Financial
Services Practice is a leader in developing retail payments, distribution
and customer strategies for banks, payment networks, and government
entities. The firm’s consulting work is supported by an ongoing
commitment to industry research spanning consumer payment preferences,
ATM deployment, and issuer and merchant debit strategies. For more
information, visit: www.doveconsulting.com
or call: (617) 482-2100.
About ACI Worldwide
ACI (NASDAQ: TSAI) was founded in 1975 and pioneered the development
of applications and networking software for online transaction processing.
Today more than 500 banks, retailers, and service providers in over
70 countries use ACI software. The company’s products are
integrated in the ACI Commerce Framework to enable transaction initiation
through Web and wireless channels; processing of transactions in
real-time; and automation of back office functions associated with
settlement, dispute processing, fraud detection, and account service.
For more information, visit: www.aciworldwide.com.
About eFunds Corporation
Headquartered in Scottsdale, Arizona, eFunds Corporation (NYSE:
EFD) is an industry leader with nearly 30 years of experience and
expertise in electronic payments. eFunds provides electronic funds
transfer (EFT) software and processing, ATM driving, deployment
and management, risk management, and global outsourcing services
to financial institutions, retailers, electronic funds transfer
networks, government agencies, and other businesses around the world.
Visit the company online at: www.efunds.com,
or call: 1.888.9eFunds (1-888-933-8637) or 480-629-7700.
About PULSE EFT Association
PULSE is the nation's leading independent financial industry-owned
and controlled electronic funds transfer network, currently serving
more than 4,300 bank, credit union and savings institution members
across the country. It is the only major network solely owned by
financial institutions. The network links an estimated 90 million
cardholders with more than 200,000 ATMs and 3.2 million POS terminals
at retail locations nationwide. In recent years, PULSE has become
known as a valued resource for consumer research related to EFT
services and an effective national voice on public policy issues
relevant to the financial services industry. For more information,
visit: www.pulse-eft.com.
|
