Financial institutions participating in the 2012 Debit Issuer Study experienced strong growth in debit transaction volume in 2011 amid profound regulatory changes (view press release). The study commissioned by debit and ATM network, PULSE, found that growth in debit remains strong despite significant regulatory changes. The Federal Reserve’s Regulation II capped the maximum interchange fees that financial institutions with at least USD10 billion in worldwide assets could receive on debit card transactions. As a result issuers reported a fundamental shift in their debit business. The relative importance of PIN debit versus signature debit and interest in debit rewards were impacted by the regulation. 89% of large issuers suggest that regulatory pressure will be a key challenge in the coming year.

The study also found that 76% of consumers now have debit cards, an increase from 73% in 2010. Consumers on average spent USD8,326 on their debit card in 2011, up from USDD7.781 in the year before. The primary source of this increase was greater usage per card, with active users performing an average of 18.3 purchases per month compared with 16.3 per month in 2010.

The debit market is expanding at the low-end, with small-ticket transactions continuing to displace cash. Average tickets on a debit transaction is USD38, the median is USD19, with more than 30% of transactions now less than USD10. Signature transactions for consumers grew by 11% and 9% for PIN transactions, which exceeded issuer’s expectation of 7% growth in both categories.

In the future, issuers expect the market to continue to grow across both consumer and business debit cards, with 15% growth in PIN transactions and 8% in signature transactions.  69% of regulated issuers and 76% of exempt FIs agreed that focusing on improving penetration, activation and usage for debit cardholders is key to development in 2012.