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The U.S. Debit Card Market


Attention: There is an updated edition available for this report.

Chapter 1: Executive Summary

  • The U.S. Debit Card Market
    • History and Development
    • Selling Points
    • Movement from a Papered to a Paperless Society: The Debit Card’s Torrid Growth
    • Table 1-1: Number and Rate of Growth of Retail Non-Cash Payments
    • PIN vs. Signature
    • Online Debit Organizations
    • Table 1-2: Online Debit Card Volumes in 2000
    • Offline Debit Organizations
    • Table 1-3: Offline Debit Card Volumes in 2000
    • Figure 1-1: 2000 Debit Card Volume
    • The Debit Card Transaction
    • Fees
    • Interchange Fees

  • The Players
    • The Card Associations
    • Figure 1-2: Visa and MasterCard Offline Debit Purchase Volume: First Half of 2003
    • Debit Programs at Visa, U.S.A
    • The Visa Check Card
    • Figure 1-3: Visa Q3 2003 Transaction Volume
    • Figure 1-4: Visa Q3 2003 Dollar Volume
    • Table 1-4: Number of Visa Debit Cards
    • Debit Programs at MasterCard
    • Table 1-5: Number of MasterCard Debit Cards
    • The EFT Networks
    • Table 1-6: Market Share by the Top 10 POS Debit Networks (%)
    • Debit Card Issuers
    • Why Do Banks Like Debit Cards?
    • Loss of Interchange Income - A Hit to Banks’ Bottom Line
    • The Effect on Banks
    • Debit Card Programs, PIN Fees, and Rewards
    • PIN Fees
    • Debit Issuer Survey
    • Rewards Programs
    • Fifth Third Bank - An Example
    • Debit Cards Offered
    • Rewards Programs
    • PIN Fees
    • Table 1-7: By the Numbers
    • The Merchants
    • The “Wal-Mart” Settlement
    • The Settlement Agreement
    • To What Did the Associations Agree?
    • How Will Online and Offline Debit Volume Be Affected?
    • Competition, Freedom of Choice, and Online and Offline Debit Fee Convergence
    • Merchant Options
    • All is Not Quiet on the Pin Front

  • Demographics
    • The Cash/Check/Debit Triumvirate
    • Miles of Room for Debit Card Growth
    • Figure 1-5: How Consumers Pay Their Utility Bills
    • Men and Women
    • Figure 1-6: Percentage of Men and Women Who Use Their Debit Card to Buy

  • Buying Power by Ethnicity
    • Table 1-8: U.S. Population and Buying Power/Income, by Race/Ethnicity, 1990 & 2001
    • Banking and Investment Products and the Relationship to the Debit Card
    • Simmons Market Research
    • The Bottom Line
    • Table 1-9:Investments by All Adults and by Debit Card Holders
    • Race/Ethnicity
    • Table 1-10: Investment Ownership by Debit Card Holders
    • Online Banking and Credit Card Ownership
    • The Bottom Line
    • Table 1-11: Online Usage/Online Banking Activity: General U.S. Population
    • Table 1-12: Online Usage/Online Banking Activity: Debit Card Holders
    • Trends and Growth Markets
    • E-Commerce
    • Table 1-13: Recurring Payments
    • Table 1-14: U.S. Households Using Online Banking
    • Fast Food Restaurants
    • Table 1-15: Fast Food Restaurants Accepting Payment Cards
    • The Gap Is Closing Quickly
    • Flexible Spending Accounts
    • U.S. Debit Card 2003 Market Estimate and Forecast
    • Overall Debit Card Market
    • Table 1-16: MasterCard and Visa Combined Offline Debit Purchase Volume: 1999-2003
    • Table 1-17: Offline and Online Debit Purchase Volume
    • The Five-Year Forecast
    • Table 1-18: Overall Debit Purchase Volume

Chapter 2: The Debit Card

  • History and Development
  • Selling Points
  • Movement from a Papered to a Paperless Society: The Debit Card’s Torrid Growth
  • Table 2-1: Number and Rate of Growth of Retail Non-Cash Payments
  • Table 2-2: Total Estimated Volume and Dollar Value of Electronic Payments
  • Figure 2-1: Electronic Payments Volume by Payment Instrument
  • Figure 2-2: Electronic Payments Value by Payment Instrument
  • PIN vs. Signature
  • Table 2-3: Online vs. Offline: A Tabled Synopsis
  • Online Debit Organizations
  • Table 2-4: Online Debit Card Volumes in 2000
  • Offline Debit Organizations
  • Table 2-5: Offline Debit Card Volumes in 20006
  • Table 2-6: PIN (or online) Debit Transactions in the USA*
  • Table 2-7: NON-PIN (or offline or signature) Debit Transactions in the USA*
  • Debit Card Fees

Chapter 3: The Debit Card Transaction - Who Is Affected?

  • Debit Cards as a “Two-Sided Market” - An Explanation for PIN vs. Signature Fee Disparity?
  • The Steps Involved in Processing a PIN-Based Debit Card Transaction
  • What’s All the Fuss About?
  • Table 3-1: 2003 EFT Network Pricing for Online Debit
  • Future of Interchange in Downward Flux
  • Interchange Fees
  • Table 3-2: 2003 Interchange Fees, by Network and Retail Channel
  • Online Debit Incentives - Recent Changes
  • Table 3-3: 2003 Network Pricing

  • The Card Associations
    • Visa
    • General Facts
    • Visa Members
    • The Visa Check Card
    • Figure 3-1: Visa Q3 2003 Transaction Volume
    • Figure 3-2: Visa Q3 2003 Dollar Volume
    • Table 3-4: Visa Q3 2003 Card Volume
    • Table 3-5: Number of Visa Debit Cards
    • Table 3-6: Visa Offline Debit Volume
    • Figure 3-3: Number of Visa Debit and Credit Cards: 1995-2003*
    • Table 3-7: Visa Q2 2003 Card Synopsis: Debit/Credit, $Volume, Transactions and Cards
    • Table 3-8: Visa Q2 2003 Card Synopsis: Debit/Credit, $Volume, Transactions and Cards
    • Visa Year in Review: 2002
    • Table 3-9: Visa Full Year 2002 Card Synopsis: Debit/Credit, $Volume, Transactions and Cards
    • Visa 1999-2001 Card Volume
    • Table 3-10: Visa Card Volume, 1999-2001
    • MasterCard
    • Debit Programs at MasterCard
    • MasterCard by the Numbers
    • A Note of Explanation
    • Table 3-11: Master Card Credit/Debit Programs, Volumes Transactions and Cards
    • Nine months ending September 30, 2003
    • Table 3-12: Master Card Credit/Debit Programs, Volumes Transactions and Cards, 2002
    • Table 3-13: Master Card Credit/Debit Programs, Volumes Transactions and Cards, 2001
    • Table 3-14: Master Card Credit/Debit Programs, Volumes Transactions and Cards, 2000

  • Visa and MasterCard: A Comparative Look
    • Figure 3-6: Purchase Volume: First Half of 2003, Visa vs. MasterCard
    • Table 3-15: Visa Check Card Activity, 2000-2002
    • Table 3-16: Debit MasterCard Activity, 2000-2002

  • The EFT Networks
    • Table 3-17: Market Share by the Top 10 POS Debit Networks
    • The State of the EFT Industry: A Synopsis
    • First Data Corporation
    • Concord EFS
    • Table 3-18: Concord EFS ATM and Debit Transactional Information (Network Services) Third Quarter 2003
    • Table 3-19: 2002 Concord EFS ATM and Debit Transactions (Network Services)
    • Table 3-20: January - September 2003 Concord EFS Year-Over-Year ATM and Debit Transaction Growth (Network Services)
    • Table 3-21: Concord EFS Payment Services Activity, Third Quarter 2003
    • Table 3-22: 2002 Concord EFS Payment Services Activity, Debit and EBT Transactions
    • Table 3-23: January - September 2003 Year-Over-Year Debit/ATM and EBT Transaction Growth, Concord EFS Payment Services
    • The Proposed First Data/Concord Merger
    • Pulse
    • Shazam
    • Table 3-24: SHAZAM 2002 Electronic Payment Transaction Synopsis
    • Fifth Third Bancorp
    • Fiserv Inc

Chapter 4: Who Is Involved?

  • Debit Card Issuers
  • Why Do Banks Like Debit Cards?
  • Loss of Interchange Income - A Hit to Banks’ Bottom Line
  • The Effect on Banks
  • PIN Fees
  • Debit Issuer Survey
  • What was the primary motivation for charging the fee?
  • Figure 4-1: Reasons Cited by Issuers for Imposing Fees
  • Rewards Programs
  • Scope of Use
  • Do they work?
  • The PIN vs. Signature Issue
  • American Express - Potential Debit Card Issuer?
  • Banks Jump Ship: Star Network Losing Bank Customers
  • The Issuers
  • Table 4-1: Debit Card Issuers Ranked by Total Cards

  • Bank of America
    • Recent Developments
    • Debit Cards Offered
    • The Alaska Airlines Visa® Check Card
    • The America West® FlightFund® Visa® Check Card
    • Table 4-2: Bank of America by the Numbers

  • Wells Fargo Bank
    • Recent Developments
    • Debit Cards Offered
    • PIN Fees
    • Table 4-3: Wells Fargo By the Numbers

  • Citibank
    • Recent Developments
    • Debit Cards Offered
    • Rewards Programs
    • PIN fees
    • Table 4-4: Citibank By the Numbers

  • Fifth Third Bank
    • Debit Cards Offered
    • Rewards Programs
    • PIN Fees
    • Table 4-5: Fifth Third By the Numbers

  • Washington Mutual Bank
    • Debit Cards Offered
    • Rewards programs
    • PIN fees
    • Table 4-6: Washington Mutual by the Numbers

  • Wachovia Bank, N.A.
    • Wachovia Bank
    • Debit Cards Offered
    • Rewards Programs
    • Processing Developments
    • PIN Fees
    • Table 4-7: Wachovia By the Numbers

  • TD Bank Financial Group
    • New Product Developments
    • Debit Card Offerings
    • Rewards Programs
    • PIN fees
    • Table 4-8: TD Bank by the Numbers

  • Bank One Corp
    • Debit Cards Offered
    • Rewards Programs
    • Table 4-9: Bank One By the Numbers

  • U.S. Bancorp
    • Recent Rewards Developments
    • Debit Cards Offered and Associated Rewards
    • The Cash Bonus Visa® Check Card
    • Visa Extras for Check Card
    • The Minnesota Timberwolves Check Card, the Minnesota Vikings Check Card, and Denver Broncos Check Card
    • The Harley-Davidson Visa Check Card
    • WorldPerks® Check Card
    • The ReliaCard
    • PIN Fees
    • Table 4-10: U.S. Bank by the Numbers

  • CIBC
    • Table 4-11: CIBC by the Numbers

  • The Merchants
    • The “Wal-Mart” Settlement
    • Which Merchants Will Come Out Best?
    • Table 4-12: Visa and MasterCard Transaction Fees: Supermarket and Non-Supermarkets
    • Equal Fees for All?
    • Merchant Options
    • Figure 4-2: Merchants With and Without PIN Pads
    • All is Not Quiet on the PIN Front

Chapter 5: The “Wal-Mart” Suit: A Synopsis

  • The Allegations
  • The Settlement Agreement
  • To What Did the Associations Agree?
  • Unbundling Debit from Credit
  • Providing a Clear and Conspicuous Identifier
  • Electronic Identification
  • Providing Signage
  • Interchange Rate Reductions
  • Visa
  • MasterCard
  • Steering
  • Prohibiting Competing Debit Marks

  • Analysis of the Settlement
  • How will online and offline debit volume be affected?
  • Competition, Freedom of Choice, and Online and Offline Debit Fee Convergence
  • Merchants May Not Stampede To PIN As Quickly As Some May Think
  • Possible Scenarios
  • Retailers Might Accept Only The Companies' Credit Cards
  • Retailers Might Accept Only PIN-Based Debit, Along With Credit Cards
  • Retailers Might Accept Only Signature-Based Debit Cards
  • Retailers Might Accept PIN- And Signature-Based Debit Cards, But
  • Steer The Customer
  • The Importance of Leverage
  • The Counterweight
  • Fallout
  • Fraud
  • Overall Debit Card Usage - The Future

    Chapter 6: The Debit Card Consumer

    • Why Debit?
    • Visa Survey Results
    • Why PIN Debit? - The American Banker Survey
    • Debit Card Use for Consumer Purchases
    • The Pragmatic Consumer
    • The Cash/Check/Debit Triumvirate
    • Miles of Room for Debit Card Growth
    • Major Points
    • Electronics and Furniture
    • Figure 6-1: Consumer Payment Methods: Electronics/Furniture
    • Apparel
    • Figure 6-2: Consumer Payment Methods: Apparel
    • Groceries
    • Figure 6-3: Consumer Payment Methods: Groceries
    • Utility Bills
    • Figure 6-4: Consumer Payment Methods: Utility Bills
    • Health & Beauty Aids
    • Figure 6-5: Consumer Payment Methods: Health & Beauty Aids
    • Gasoline
    • Figure 6-6: Consumer Payment Methods: Gasoline
    • The Affluent
    • Electronics
    • Figure 6-7: Affluent Consumer Payment Methods: Electronics/Furniture
    • Apparel
    • Figure 6-8: Affluent Consumer Payment Methods: Apparel Groceries
    • Figure 6-9: Affluent Consumer Payment Methods: Groceries Utility Bills
    • Figure 6-10: Affluent Consumer Payment Methods: Utility Bills Health & Beauty Aids
    • Figure 6-11: Affluent Consumer Payment Methods: Health & Beauty Aids
    • Gasoline
    • Figure 6-12: Affluent Consumer Payment Methods: Gasoline
    • Men and Women
    • Figure 6-13: Percentage of Men and Women Who Use Their Debit Card To BuyDiscount, Department, and Specialty Store Usage Patterns
    • Men
    • Table 6-1: When You Purchase Men’s Clothing, What Method of Payment Do You Use Most Often?
    • Women
    • Table 6-2: When You Purchase Women’s Clothing, What Method of Payment Do You Use Most Often?
    • Methods of Payment
    • Debit Card Ownership by Ethnicity
    • Table 6-3: Debit and Credit Card Ownership, by Race/Ethnicity
    • Buying Power by Ethnicity
    • Table 6-4: U.S. Population and Buying Power/Income by Race/Ethnicity, 1990 & 2001
    • Banking and Investment Products and the Relationship to the Debit Card
    • Simmons Market Research
    • The Bottom Line
    • Table 6-5: Investment by All Adults and by Debit Card Holders
    • Age
    • Table 6-6: Consumer Ownership of Investments, By Age, Overall
    • Table 6-7: Consumer Ownership of Investments, By Age, Among Debit Card Holders
    • Gender
    • Table 6-8: Consumer Ownership of Investments, By Gender and By Debit Card Ownership
    • Race/Ethnicity
    • Table 6-9: Consumer Ownership of Investments, By Race/Ethnicity, Overall
    • Table 6-10: Consumer Ownership of Investments Among Debit Card Holders, By Race/Ethnicity
    • Schooling
    • Table 6-11: Consumer Ownership of Investments, By Education Level
    • Table 6-12: Consumer Ownership of Investments Among Debit Card Holders, By Education Level
    • Income
    • Table 6-13: Consumer Ownership of Investments - Overall with Individual Incomes From Less Than $9,999 to $59,999
    • Table 6-14: Consumer Ownership of Investments - Overall with Individual Incomes From $60,000 - $250,000+
    • Table 6-15: Consumer Ownership of Investments - Debit Card Owners with Individual Incomes From Less Than $9,999 to $59,999
    • Table 6-16: Consumer Ownership of Investments - Debit Card Owners with Individual Incomes From $60,000 - $250,000+
    • Online Banking and Credit Card Ownership
    • The Comparison Also Holds True for Online Banking and Credit Cards.
    • Age
    • Table 6-17: Consumer Behavior: Online Service, Online Banking and Credit Card Use, Overall Population, By Age
    • Table 6-18: Consumer Behavior: Online Service, Online Banking and Credit Card Use, Debit Card Holders, By Age
    • Gender
    • Table 6-19: Consumer Behavior: Online Service, Online Banking and Credit Card Use, Overall Population, By Gender
    • Table 6-20: Consumer Behavior: Online Service, Online Banking and Credit Card Use, Debit Card Holders, By Gender
    • Ethnicity
    • Table 6-21: Consumer Behavior: Online Service, Online Banking and Credit Card Use, Overall Population, By Race/Ethnicity
    • Table 6-22: Consumer Behavior: Online Service, Online Banking and Credit Card Use, Debit Card Holders, By Race/Ethnicity
    • Education
    • Table 6-23: Consumer Behavior: Online Service, Online Banking and Credit Card Use, Overall Population, By Education Level
    • Table 6-24: Consumer Behavior: Online Service, Online Banking and Credit Card Use, Debit Card Holders, By Education Level Income
    • Table 6-25: Consumer Behavior: Online Service, Online Banking and Credit Card Use, Overall Population, By Income
    • Table 6-26: Consumer Behavior: Online Service, Online Banking and Credit Card Use, Debit Card Holders, By Income
    • Focus on Hispanics
    • Table 6-27: Hispanic Consumer Behavior: Online Service, Online Banking and Credit Card Use,
    • Table 6-28: Hispanic Consumer Ownership of Investments - Overall and Debit Card Owners
    • The Hispanic Debit Cardholder Survey
    • Survey Findings (Source: MasterCard International)
    • Debit Card Knowledge
    • Debit Card Usage
    • Effective Marketing to Hispanics

    Chapter 7: Market Size

    • Synopsis of Overall Market
    • Debit Card Holders Use Their Cards More For Purchases
    • Consumers Want to Pay Recurring Bills with Debit Cards
    • Offline Debit Card Market
    • 2003 Purchase Volume Estimate
    • Table 7-1: MasterCard and Visa Combined Offline Debit Purchase Volume: 1999-2003
    • Visa Controls Lion’s Share of Cards/Transactions
    • Table 7-2: Visa and MasterCard Offline Debit Shares: Cards, Transactions and Purchase Volume, 1999-2002
    • Visa and MasterCard Patterns Hold Steady in 2003
    • Table 7-3: Overall Debit Card Activity (by Purchases and Cash Advances), Visa and MasterCard First Half 2003
    • Table 7-4: Debit Card Activity by Purchases, Visa and MasterCard, First Half 2003
    • Table 7-5: Debit Card Activity by Cash Advances, Visa and MasterCard, First Half 2003
    • Table 7-6: Overall Debit Card Activity (by Purchases and Cash Advances), Visa and MasterCard 2002
    • Table 7-7: Debit Card Activity by Purchases, Visa and MasterCard, First Half 2002
    • Table 7-8: Debit Card Activity by Cash Advances, Visa and MasterCard, 2002
    • Table 7-9: Debit Cards by Purchases, Visa and MasterCard, 1999-2001
    • 2001 Debit Cards by Purchases
    • 2000 Debit Cards by Purchases
    • 1999 Debit Cards by Purchases
    • Online Debit Card Market
    • Figure 7-1: 2000 Debit Card Volume
    • Table 7-10: Total Debit Card Estimated Volume and Dollar Value, 2002
    • Table 7-11: Annual Percentage Change In Online & Offline Debit Transactions
    • Figure 7-2: Annual Percentage Change In Online & Offline Debit Transactions
    • Overall Debit Card Market
    • Figure 7-3: Offline and Online Debit Purchase Volume, 2003*
    • Debit vs. Credit
    • Table 7-12: Total Estimated Volume and Dollar Value of Electronic Payments, 2000
    • The Debit Card: Poised for Further Growth
    • The Five-Year Forecast
    • Table 7-13: Overall Debit Purchase Volume
    • Figure 7-4: Overall Debit Purchase Volume

    Chapter 8: Trends and Opportunities

    • The Gap Between Offline and Online Interchange Fees Is Shrinking
    • Fraud Continues to Concern
    • Consumers Want ID Theft Protection
    • A Case for PIN Debit?
    • Online Fraud
    • The Issuers Are Listening
    • E-Commerce
    • More and More consumers Will Use the Internet to Pay Bills
    • Table 8-1: Online Consumers Using the Internet to Pay Credit Card and "Other" Bills: 2001 and 2005 Forecast
    • Using PIN Cards Online
    • Recurring Payments
    • Table 8-2: U.S. Households Using Online Banking
    • Utilities
    • Fast Food Restaurants
    • The Gap Is Closing Quickly
    • McDonald’s
    • Burger King
    • Wendy’s
    • Hardee’s
    • Jack in the Box
    • Steak & Shake
    • Flexible Spending Accounts
    • Legal Obstacles Removed
    • New Twists
    • Food Stamps
    • Debit Business Card Programs Are Proliferating
    • Minicards
    • PrePaid Debit Cards
    • Phone Payments
    • DebitMan
    • Dexit
    • Youth and Student Cards
    • PrePaid Debit Cards
    • College Cards
    • Debit Cards Will Have a New Face

  • The debit card has emerged from the shadow of its older sibling, the credit card. Over the past decade, debit card has grown from accounting for 274 million transactions in 1990 to 8.15 billion transactions in 2002, to challenge the credit card as the preferred payment card in the United States. As it stands, the debit card industry is a multi-billion dollar engine that helps drive bank profits and point-of purchase consumer sales - but is also beginning to redefine traditional payment options in the business and government sectors, such as food stamps, benefits, and payroll. The debit card has arrived and is here to stay.

    And yet, though it remains poised for growth, the debit card has also reached a crossroads. A recent settlement has cost VISA and MasterCard approximately $3 billion, and has dramatically reduced the fees they can charge for signature-based debit purchases. The effects of the settlement reach into every layer of the industry - from rewards incentives, to marketing programs, to future fee arrangements, and future growth. Consumer preferences for PIN- or signature-based debit will certainly influence how things unfold, and whether either debit card option will suffer or bloom in the short, mid, or long term.

    Report Methodology
    The information in The U.S. Market for Debit Cards is based on both primary and secondary research. Primary research involved on-site examination of the financial milieu, interviews with marketing, public relations and analysts within the financial industry and consultants to the industry. Secondary research entailed data-gathering from relevant trade, business, and government sources, including company literature. The analysis of consumer demographics derives from Simmons Market Research Bureau survey data for spring 2003.

    What You’ll Get in this Report
    The U.S. Market for Debit cards provides a wealth of tables, charts, information, and concise and pointed analysis to enable investors, banks, large and midsize merchants, and marketing managers the tools they need to understand and navigate the evolving debit card landscape - from its development, and the concurrent evolution of the PIN- and signature-based debit options, to issuer and merchant industry players, marketing initiatives, and breaking developments, to reasoned and well supported forecasts of future industry growth. The report addresses the following segments:

    • The Market (including market size and composition, and projected market growth)
    • The Marketers (including discussions of specific issuers and market shares)
    • Competitive Profiles (of the card issuers, and analyses of the products they market)
    • Merchant Profiles (which merchants are more likely to accept debit cards and why)
    • The Consumer (usage profiles and behaviors)
    • Trends and Opportunities

    Scroll down to see a more detailed outline of the contents of this report.

    How You Will Benefit from this Report
    Financial institutions and retailers alike will find this report invaluable, as it provides a comprehensive package of information and insight not offered in any other single source. You will gain a thorough understanding of the current market for debit cards, as well as projected revenues and trends through 2008. Contributing to that understanding will be a complete analysis of the consumer for debit cards based on Simmons data.

    This report will help:

    • Marketing Managers identify market opportunities and develop targeted promotion plans for debit cards
    • Research and development professionals stay on top of competitor initiatives and explore demand for products in the debit card arena.
    • Advertising agencies working with clients in the financial industry understand the product buyer to develop messages and images that compel consumers to use debit cards.
    • Business development executives understand the dynamics of the market and identify possible partnerships.
    • Information and research center librarians provide market researchers, brand and product managers and other colleagues with the vital information they need to do their jobs more effectively.


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