The nation’s love affair with credit cards appears to be fading as the share of debit card use rises.
One study found that debit-backed transactions eclipsed credit spending for the first time last year. Debit cards are especially popular among younger consumers, many of whom lack access to credit. This shift signals that the method could see expanded use in the future as these consumers’ spending power increases and they maintain their preferences for debit.
The October Next-Gen Debit Tracker® is a data-rich examination of the increase in debit card use as consumers continue to shun cash.
Around the Next-Gen Debit Space
If Australia’s treasurer Josh Frydenberg gets his way, the country’s central bank will require banks and debit card issuers to provide options for instant payments at lower costs. Frydenberg encouraged the Reserve Bank of Australia (RBA) to adopt affordable alternatives to the Visa and Mastercard networks. In a letter to the RBA, he said the government strongly encouraged the panel to recognize the critical role of dual network debit cards in enabling a less expensive route for large and medium-sized financial institutions (FIs).
More than 10 years after Congress reformed swipe fees, merchants are still seeking a fairer payment landscape. The Federal Reserve Board has made it clear that retailers should have the ability to choose which payment networks process their online debit card transactions. It is needed, the Fed said, because FIs and networks continue to limit competition for debit business despite the passage of the Durbin Amendment in 2010. The measure said the levies, also called interchange fees, should be proportional to the cost of a debit card transaction. The central bank has capped the fee at 22 cents for big banks.
Omnichannel commerce trends that took off during the pandemic are likely to stay, according to new research. The Carat Insights report reveals physical and digital commerce experiences are popular among consumers, and digital spending has soared across verticals. In-store digital payments continue to grow as restaurants, supermarkets and retailers are adopting digital payment tools that connect eCommerce to a retailer’s store. Researchers surveyed 2,200 adults in the United States to learn how the pandemic has impacted their payment preferences. The survey analyzed spending from the first quarter of 2020 through the second quarter of 2021.
For more on these and other next-gen debit news items, download this month’s Tracker.
Chipotle Mexican Grill on the Rising Use of Debit Among Digital Ordering Customers
The pandemic has had far-reaching effects on consumers’ spending habits and payment preferences. The 2021 Debit Issuer Study by PULSE, a Discover company, found that although the number of debit transactions declined last year, total debit spending increased as card holders made fewer purchases and generated larger tickets. Increasing access to debit payments is not just an opportunity but a necessity for merchants and restaurants as many look to capture a larger share of customer spending.
In this month’s Feature Story, PYMNTS spoke with Nicole West, vice president of Digital Strategy and Product at fast-casual chain Chipotle Mexican Grill, on how enabling customers to pay using digital wallets and debit is helping meet their evolving payment preferences.
Deep Dive: Debit Use Soars in the Restaurant, Hospitality Sectors
The pandemic forced the closure of many restaurants for much of last year, and it also negatively affected cash use. In an effort to prevent the spread of the coronavirus, eateries shifted to exclusively offering takeout and delivery, with some no longer accepting cash as a form of payment.
This month’s Deep Dive explores how debit cards benefitted from the retreat from cash, and debit use surpassed credit spending for the first time.
About the Tracker
The Next-Gen Debit Tracker®, a collaboration between PYMNTS and PULSE, a Discover company, examines consumers’ changing payment behaviors, the innovations that are reshaping how they use debit and how advanced solutions like machine learning technologies can help financial institutions secure debit payments.