Today TowerGroup releases a new report on debit and pre-paid cards. Its research finds that the debit card's increasingly dominant position as a payment vehicle will continue through 2009 and beyond. Prepaid cards will also continue their rapid growth as a result of foreclosures affecting credit scores and consumers continuing to require the benefits of payment card access.
Transactions for debit cards in the United States surged three times faster than those for credit cards from 2005 to 2007, as consumers separated purchases into "lending" versus "spending" products. Debit cards have absorbed a growing share of consumable purchases – such as gasoline, groceries, and other day-to-day consumer expenses – leaving the credit card for durable goods purchases. As consumers and businesses work their way out of a sluggish economy, TowerGroup projects the weakened economy will continue to erode the rate of credit card transaction growth.
Crediting Debit: How Debit Cards Will Grow in a Changing Environment
by Brian Riley
October 8, 2007