Last week, Visa reported its second fiscal quarter financial results – and included a mention that Visa’s US debit card purchase volume in the fourth calendar quarter of 2008 slightly exceeded that of its US credit card purchase volume ($206 billion vs. $203 billion).
Today, in another press release, Visa reinforced that point.
Six years earlier, in 2002, the transactions on Visa debit cards in the US exceeded the transactions on Visa credit cards for the first time.
In fact, purchase volume on credit cards has been shrinking of late – with Fitch reporting today that spend volume at the top six issuers fell an average of 14.2% sequentially in the first quarter of 2009 and 14.0% year-over-year.
Obviously, consumers are increasingly shunning credit cards in favor of using their debit cards. It’s been a long road – from the early days of debit cards in the early 90’s to today. Back then, retail bankers were very concerned about fraud risks on signature debit cards. But, with increasing levels of electronic POS authorizations, many of those risks fell away. The utility of the signature-based debit card – accepted at almost all merchant locations – can’t be beat.
What else is driving increased consumer usage of debit cards? Fewer merchants willing to accept traditional checks? Speed of checkout?
What do you think? Please add your comments below!