Packaged Facts has released their Third edition of Debit Cards in the U.S., updating their May 2006 analysis of this market.

The report notes astronomical transaction volume growth: debit card use doubled between 2003 and 2007, and dollar volume escalated at a compound annual growth rate  of 20%.

Rewards programs are driving market growth, debit fraud is on the rise, and younger consumers and prepaid debit are key elements in issuers' growth strategies.

Capital One’s "decoupled debit" program, which enables merchants to issue co-branded cards linked to a customer's current bank account, represents a significant threat to the bank interchange income.  Retailers are also turning to other alternative payment networks to bypass interchange.

Other technology advancements include:

∙        The Federal government's elimination of the receipt requirement for small debit purchases;

∙        Advances in the burgeoning micropayments, mobile payments, and PINless debit segments;

∙        More targeted rewards programs that differentiate consumer segments; and

∙        The use of biometrics in fraud protection.

Packaged Facts' analysis of consumer behavior and demographics derives from the Simmons Market Research Bureau's (New York, NY) Spring 2007 adult consumer survey, which is based on approximately 25,000 respondents age 18 or over, and BIGresearch's (Worthington, OH) Consumer Intentions and Actions data, which are based on online monthly surveys of over 8,000 U.S. adults.

Other findings include:

∙        U.S. debit market exceeds $1 trillion

∙        Value of debit payments outpaces credit

∙        Number of debit transactions exceeds credit for the first time

∙        Nearly 29 million debit card transactions in 2007

∙        18 billion signature payments vs. 11 billion PIN, but PIN growing faster

∙        Debit used more frequently for a range of expenses

∙        Fraud costs issuers hundreds of millions of dollars annually

∙        Issuers collect billions from NSF and overdraft charges

∙        Growth to remain strong, but pace will slow

∙        Industry players focus on attracting and motivating cardholders, not luring them away from rivals...yet

∙        Bank of America maintains its overwhelming leadership in the debit arena

∙        Top two issuers account for one in four transactions

∙        Rewards programs are key to industry growth

∙        54% of U.S. adults have a debit card

∙        Over two-thirds of 25-34 year olds have a debit card

∙        Debit increasingly used for everyday purchases, bills, gifts

∙        Battle over interchange is ever-more contentious

∙        Banks depend on overdraft fees as a source of revenue

This Report may be ordered through ReportLinker: http://www.reportlinker.com/p090947/US-Market-for-Debit-Cards.html

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