The story of debit cards in the pandemic year of 2020 turns out to have several chapters—including higher average tickets, a sharp swing to card-not-present usage, a dramatic surge in contactless adoption, and higher mobile-wallet usage. Meanwhile, account-to-account transfers turned out to be the fastest-growing form of debit, though usage remains small. And ATM usage dropped.
These are some the salient findings of the 16th annual Debit Issuer Study from Discover Financial Services’ Pulse network, released Tuesday with results for 2020.
As with credit cards, online purchases with debit cards surged in the face of lockdowns, store closings and other results of the pandemic. Card-not-present usage accounted for 34% of debit transactions and 46% of dollar volume last year, according to the study. That’s up from 27% and 38%, respectively, in 2019.
All in all, card-not-present transactions per active card rose 23% compared to 2019, according to the study, which incorporates statistics from 48 issuers accounting for 40% of all debit transactions in the United States. Back-of-card network affiliations among these financial institutions were mixed, with 40% tied to Pulse but with representation from Star (27%), NYCE (17%), Accel (8%), and other networks, including Mastercard’s Maestro and Visa’s Interlink.
Contactless transactions accounted for 5.3% of all transactions on contactless cards, up from 2.3% in 2019, and 1.6% of transactions on all debit cards, up from 0.25%. Meanwhile, 30% of all debit cards in circulation had contactless capability, up from 11%. The study forecasts that 64% of all debit cards will have contactless capability by the end of this year, a proportion that will reach fully 94% by the close of 2023.
Along with contactless card usage, mobile wallets also soared in 2020. The study finds about 2 billion debit transactions took place across the three major wallets—Apple Pay, Google Pay, and Samsung Pay—up 51% from 2019. But Apple Pay has established clear dominance in wallet-based debit, accounting for 92% of transactions.
Moving money between accounts using debit cards—said to be the newest debit application—is now the “fastest-growing category of debit,” according to the Pulse report. Account-to-account (A2A) transfers grew 59% last year, faster than card-not-present’s growth rate, though these transfers still account for a small number of debit transactions overall.
The study reports some ambiguity among issuers regarding this trend. “Issuers have mixed views on the outlook for A2A,” the authors say. “Some acknowledge its growing presence in the economy, the utility it provides to consumers and the incremental transactions it generates. Others express concern for the banking industry’s long-term role as consumers embrace non-traditional payment apps.”