2008 Debit Issuer Study shows growth for ‘Emerging Technologies’

The 2008 Debit Issuer Study, conducted by Oliver Wyman, provides new data and comparisons to the results of the 2007 Debit Issuer Study, released in February 2007. This comprehensive survey offers a revealing look at debit issuer performance, debit card trends and the latest debit technologies and service offerings.

“Although growth in debit use remains strong, debit card issuers are broadening their electronic payment services to include new payment devices, targeted cardholder perks such as surcharge-free programs, and greater levels of service,” says Cindy Ballard, executive VP, PULSE. “Based on survey responses, we expect this trend to continue over the coming years.”

A total of 62 financial institutions participated in the study, including large banks, community banks and credit unions that collectively issue more than 74m debit cards, or 28% of US debit cards. The institutions also represent 46,000 ATMs and are balanced across institution size, type, geography and network participation.

The 2008 survey is the first Debit Issuer Study to address emerging payments technologies. Although all emerging payments options have benefits, each faces significant growth challenges, explains Tony Hayes, Partner, Oliver Wyman:
1. Contactless cards - 10% of respondents currently offer contactless debit cards (cards equipped with a device enabling the user to tap the card rather than swipe it). Another 35% say they plan to introduce this capability in the future. Of those that offer contactless, only 24% of their cardbase is contactless, on average. Key barriers to contactless adoption are low merchant acceptance, unfavourable cost/benefit ratios and low demand.
2. Mobile banking - 15% of respondents currently support mobile banking, and another 28% say they are planning to introduce it “soon.” With the technology still in a state of development, most issuers are taking a measured approach.
3. Mobile payments - Mobile payments (the technology includes mobile phones equipped with payments-enabled chips, as well as message-based payments) is largely in the research phase, with 56% of issuers exploring the possibility of implementing it.

“The 2008 Debit Issuer Study offered intriguing insights into financial institutions' interest in and adoption of emerging payments technologies,” concludes Ballard. “In the coming years, increased use of such technologies will play a key role in helping issuers grow their electronic payments businesses.”