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Debit transactions up 14.4 but penetration slows
HOUSTON (4/30/08)--Debit card issuers--including credit unions--saw a 14.4% growth in debit transactions last year, but the growth rate dropped four percentage points from the year before. And penetration growth has slowed, according to a study released Tuesday. The 2008 Debit Issuer Study surveyed 62 credit unions, community banks and large banks. It was commissioned by PULSE and conducted by Oliver Wyman. It includes new data and comparisons to the results of the 2007 Debit Issuer Study released in February 2007. The overall 14.4% transaction growth comprises a 15% increase in signature debit transactions and a 14% growth for PIN debit. Although transaction growth remained strong in 2007, it was lower than the 18% growth rate in 2006. "Despite having a strong year in 2007, issuers are implementing a number of programs aimed at improving the performance of their debit card programs in 2008," said Cindy Ballard, PULSE executive vice president, in a press release. "These efforts center on rewards programs, targeted cardholder promotions and expansion into new products and new merchant categories," Ballard added. Institutions surveyed issued more than 74 million debit cards--28% of the debit cards in the U.S. They represent 46,000 ATMs and are balanced across institution size, type, geography and network participation. Eighty-six percent of respondents' debit cards are signature-capable, while 14% are ATM/PIN-only cards. These results are the same as the previous survey. However, roughly 29% said they plan to convert at least a portion of their ATM/PIN-only cards to cards with capability to handle both signatures and PINs during 2008. Of the debit transactions made last year, 65% were authorized by signature and 35% by PINs. Other findings:
* The average debit card penetration rate was 73%--a 1% increase over 2006. Card activation (defined as using the card for one signature debit transaction within the past 30 days) averaged 59%, compared with 56% in 2006. * Active cardholders, on average, performed 16.6 point-of-sale transactions a month during 2007, compared with 16.1 transactions a month the year before. * The average amount transacted was $43 for PIN debit and $38 for signature debit, compared with $42 and $40, respectively, the year before. * Nine percent of PIN debit purchases included cash back. ATM cash withdrawals exceeded PIN debit cash-back withdrawals by a ratio of nine transactions to one. In dollars, ATM withdrawals exceeded PIN debits by a ratio of 30 to one. * Twenty-five percent of the issuers surveyed charged a PIN debit transaction fee at the point of sale to at least some cardholders. That compared with 28% in 2006 and 32% in 2005. Per-transaction fees averaged 53 cents but affected only 0.6% of cardholders, compared to 5% affected in the previous survey.

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