A recent First Annapolis Consulting survey showed that leading US debit issuers continued to experience strong portfolio performance in 2016, with year-over-year transaction growth in the high single-digits.
Issuers averaged 24.5 debit transactions per active card per month in 2016, with average monthly spend per active card of $928 (see Figure 1). Results are based on quarterly data provided by 12 U.S. issuers representing 113MM debit cards (approximately 30% of cards issued) as part of First Annapolis’ ongoing Debit Issuer Benchmarking Study, which has been tracking participating issuer performance since 2013 – according to Melissa Fox, Senior Manager, and Chris Razzano, Senior Analyst, Payments Strategy & Innovation at First Annapolis.
Most issuers in our sample experienced positive growth in their total card base (i.e., number of debit cards issued) over the past two years, combined with a decline in active card rates, potentially due to issuer-specific EMV migration patterns. Issuers’ total card bases expanded at an average annual rate of 4.1% between 2014 and 2016, while the average active card rate decreased 1.6%-points, from 65.9% to 64.3%. Overall, issuers’ active card bases increased an annual rate of 4.0%, on average.
Per-active card metrics have improved since 2014:
- Average monthly transactions increased from 23.1 to 24.5 (an average annual increase of 3.0%);
- Monthly spend increased at an annual rate of 1.9%, resulting in a slight decrease in average ticket size, from $38.90 to $38.07, which is consistent with the trends shown in the Federal Reserve’s most recent Payments Study.
As a result of both card base increases and improved performance metrics, issuers’ debit transaction volumes increased at 7.0% CAGR from 2014 to 2016, on average (see Figure 2).
Figure 2: Change in Debit Growth Drivers
Over the last two years, EMV migration has been a primary focus for most issuers, and many issuers are still converting their portfolios. First Annapolis collected EMV data from a subset of participating issuers beginning in Q1 2016 to track the shift to EMV cards and growth of chip-based transactions. As of Q4, 72% of participating issuers’ cards were EMV-enabled, compared to 52% in Q1, with an average active card rate of 76%. These issuers averaged 9.5 monthly chip-based transactions per active EMV card in Q4, up from 1.5 in Q1. As of Q4, chip-based transactions represented 26% of their total transactions, on average, compared to 4% in Q1.
With all of the changes taking place around the debit card form factor—the effort required to coordinate an industry-wide shift from mag-stripe to chip technology, while at the same time navigating the early stages of a shift from plastic to digital–it is easy to lose sight of the underlying fundamentals of debit growth. Rest assured: debit remains a healthy and vibrant payment mechanism, with a strong outlook for continued growth.
The post Bench marking the US Debit Issuers performance – 2014 to 2016 appeared first on Payments Cards & Mobile.