Abstract
The debit industry has seen significant growth over the last eight years,
while signature debit growth is down ever so slightly from 21 percent in 2003
to 18 percent in 2005. PIN debit has more than compensated with growth rates
between 35 to 38 percent in the same time period. As a result of these two
spectacular increases, debit transactions either already have, or will very
soon, exceed credit transactions.
Despite debit's incredible growth in volume terms Mercator Advisory Group
believes that the EFT networks that enable PIN debit are approaching a
critical juncture. Signature debit, while currently facing a slightly slowing
growth rate, is also the only debit solution fully enabled and successfully
entering several new emerging markets, such as eCommerce, recurring bill
payments, and those markets where cash is being displaced using Contactless
and signature-less solutions. Left unchecked the increased growth in internet
and mobile payments and cash replacement will occur primarily at the expense
of growth in EFT transactions. This will be of some concern if these new
markets grow as quickly as proponents hope. It is important to note that we
are talking about future markets and the relative market share of transaction
types in these emerging environments.
This report evaluates the consumer preference for debit instruments today, how
these preferences can be shifted by the popular press and the payment industry
itself, the targeting of three new markets by card associations for future
growth: 1) online transactions, 2) recurring bill-pay environments, and 3)
Contactless/signatureless environments intended to displace low-value cash
transactions, and issues that make it difficult for EFT network operators to
react unilaterally to enter these same evolving markets; and therefore, make
co-operative plays related to technology standards and implementation a real
consideration.
Tim Sloane, Director of the Debit Service for Mercator Advisory Group and the
author of the report indicates that despite strong growth rates across the
board for debit, EFT network operators may need to start establishing plans to
target these same markets.
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