TowerGroup’s Consumer Credit service has just published new research on the evolving debit card industry and the issues surrounding the competition between the different types of debit card transactions. The report is titled “The US Debit Revolution: How It Happened.”
In the early 1990s, debit cards had barely scratched the surface of the US consumer payments market. What a difference a decade can make. Debit now represents the US payment card industry’s most significant new product or service in 15 years. Debit cards have taken share away from both cash and checks and show strong growth rates. US consumers have found debit useful for precisely those types of purchases that are not suitable for credit-and this alone has significantly boosted debit volume and even more important, debit transactions.
Debit cards come in more than one variety. Offline debit runs on the major card associations’ networks, while online debit uses electronic funds transfer (EFT) switches as its transaction backbone. Both provide their own value in the evolving debit market, but to understand the implications of this revolution in consumer payments, it is critical to understand the products’ history, how they work and how they differ from each other.
In this report, TowerGroup provides an overview of the history of US debit cards and examines the two major kinds of debit card transactions-online and offline debit-as well as the technology and cost structure that differentiate them.