U.S. Debit Card Transaction Volume to Reach $2 Trillion by 2010: Study

NEW YORK -- Debit cards are quickly catching up to credit cards and cash as a primary means of point-of-service and online transactions, and are expected to exceed $2 trillion in transaction volume by 2010, according to a new study by market research firm Packaged Facts.

According to "Debit Cards in the U.S.," the total transaction volume in the U.S. debit card market reached $907 billion in 2005, up 18.6 percent from 2004. Increased penetration among young consumers as well as growing use of recurring bill payments and online transactions are helping debit cards close the gap on credit card transactions. Indeed, in Q1 2005, Visa check card use for online purchases accounted for 52 percent of all online Visa payments, surpassing online Visa credit card transactions for the first time in history, says Packaged Facts.

"Rewards, already a proven seller with credit cards, should become the next big frontier for debit cards," notes Don Montuori, publisher of Packaged Facts. "Prepaid debit is also poised to become popular by providing the estimated 48 million unbanked consumers with a convenient means of payment beyond cash."

Behind the scenes, however, merchants, card networks, and banks have battled in the courts over interchange rates, processing fees, and other issues for over ten years. Such internal warring, however, hasn't slowed down card issuers' innovative new plans to increase debit volume. (For a detailed report on credit card transaction fees in the supermarket industry, see "Interchange Fees: The Tipping Point," in the May 1 issue of Progressive Grocer, or online at:
http://www.progressivegrocer.com/progressivegrocer/magazine/article_display.jsp?vnu_content_id=1002425619 )

"Debit Cards in the U.S." examines new product trends, offers competitive profiles of industry leaders, provides a behind-the-scenes look into the financial framework facilitating debit card usage, explores opportunities for further market penetration, and looks at consumer trends and behaviors surrounding debit card transactions.
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