Pulse study confirms Covid-19 accelerated debit transformation

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he 2021 Debit Issuer Study, commissioned by Discover Financial Services’ Pulse debit network and conducted by Oliver Wyman, portrays a debit market evolving with the rapid transformation of commerce. Response to the Covid-19 pandemic prompted US consumers to make fewer but larger debit purchases in 2020, resulting in a strong increase in total debit spending. The study also identifies merchant categories that expanded in 2020 as a result of the pandemic, such as digital retailers and home supply stores, as well as those that contracted, such as travel and dining.

“Several debit trends that had been gaining momentum prior to the pandemic accelerated in 2020,” said Steve Sievert, EVP of marketing and brand management at Pulse. “The shift to digital commerce and card-not-present transactions, adoption of contactless and use of debit for money transfers all leaped forward at warp speed.”

Fewer, larger purchases
For the first time in the 16-year history of the Debit Issuer Study, the number of debit transactions declined in 2020 while debit dollar volume increased. Debit transactions totalled 76.1 billion, compared to 78.1 billion in 2019 – a decline of 2.5% year on year. At the same time, total debit spending grew by 8% year on year, thanks to a significant jump in ticket sizes.

The average ticket size rose from $40.50 in 2019 to $44.80 in 2020, an increase of more than 10% – the largest upswing in the study’s history. This boosted US debit volume to $3.4trn in 2020. When combined with prepaid debit volume of $240bn, total debit spend eclipsed total spend on credit cards for the first time.

“Generally, people headed out less often which meant fewer debit purchases, but they stocked up when they did go out for groceries,” said Tony Hayes, partner and global payments team lead at Oliver Wyman.