“First Data Study Re-Confirms Debit as the Fastest Growing Payment Method; Transaction Volume Increases When Choice is Offered”
DENVER, Aug 01, 2006 (BUSINESS WIRE) — Having the option to make payments via PIN or signature debit increases the number of transactions consumers make monthly, according to a recent survey released by First Data Corp. (NYSE:FDC). The STAR(R) Consumer Payments Usage Study, conducted by an independent research firm, found that consumers who use both PIN and signature debit at the point-of-sale (POS) conduct an average of nearly 23 transactions per month versus 14 for those who solely use signature and 10 for those using only PIN.
“By the responses provided in this study, along with other independent research, consumers have made it clear they prefer businesses — from their doctor’s office to the movie theater — to offer a variety of electronic payment options,” said Ron Congemi, senior vice president, Strategic Industry Relations, First Data. “It’s important for retailers to promote consumer choice and for financial institutions to provide consumers with the features and products to meet their preferences. Doing so will help attract new customers, increase revenue and enhance customer retention.”
The 2005/2006 survey data also points to the continued growth of debit activity at the POS. Over the past five years, consumers’ average POS debit activity has grown from less than eight transactions a month to more than 11. The average total number of debit POS transactions made monthly has increased 21 percent in the last year, from 15 to 18 transactions per month.
Although PIN and signature debit both demonstrated transaction growth, preference of PIN debit over signature debit was 45 percent to 33 percent. Security was the leading response for choosing PIN debit as reported by 48 percent of respondents. Additionally, 57 percent of PIN-secured debit users reported that having the choice to receive cash back at the POS resulted in more usage of their cards.
“Based on the results of this study, STAR is addressing consumers’ payment preferences by working with merchants and financial institutions to enable and promote debit payments effectively to their customers,” added Congemi. “Our collective understanding of consumer payments needs and preferences allows us to offer our customers the tools and support they need to be successful.”
About the Survey
In its 19th edition, the 2005/2006 Consumer Payments Usage Study is one of the largest studies in the financial services industry. STAR Networks Inc., a First Data company, sponsors the study annually to better understand consumer electronic payments usage habits and attitudes. The survey, directed by Applied Management & Planning Group, includes responses from nearly 14,000 consumers in 35 states. The error rate for the survey was plus or minus one percent at the 95 percent confidence level.
About the STAR Network
First Data Corp.’s STAR Network is a coast-to-coast electronic payments network and an expert in secure, real-time electronic transactions. Financial institutions rely on the STAR Network to deliver ATM access, PIN-secured debit purchasing, deposit sharing, interbank transfers and surcharge-free ATM access programs to their cardholders. The STAR Network is a leader in developing check debit, Internet and telephone bill payments, small-value payments, deposit risk management and ATM check imaging products. The STAR Network serves more than 5,700 financial institutions across the U.S. and provides cardholders with account access at approximately 1.9 million ATM and retail locations. There are more than 140 million cards carrying the STAR logo. STAR has a broad footprint of distribution points across the United States including the acceptance of the STAR card at approximately 5.1 million POS terminals. In 2005, First Data Debit Services processed 9 billion transactions.
PIN and Signature Debit Work Best Together
— 62 percent of ATM/debit cardholders reported using their ATM/debit cards at the POS in the 30 days prior to the survey. Over the past five years, consumers’ average POS debit activity has grown from less than eight transactions a month to more than 11.
— Among all card users, 45 percent of consumers report using both PIN and signature methods, an increase from last year’s 39 percent. The number of respondents using both is significantly greater than those who report utilizing a single method.
— Using both methods has a major effect on transaction volume: Those who use both PIN and signature debit account for 75 percent of all debit POS transactions made. Consumers utilizing both methods conduct an average of 23 transactions a month versus 14 for those who solely use signature and 10 for those using only PIN.
— The expanding number of locations accepting debit, particularly for small-ticket purchases, underscores the value of promoting both PIN and signature debit to consumers. Among respondents, PIN debit is the preferred debit option at discount stores, convenience stores, drug stores and do-it-yourself stores, while signature debit leads in food categories and specialty retail locations.
Choice, Convenience and Security Drive Debit Usage
— The average cardholder surveyed conducts 58 percent more transactions per month when given the option to use both signature and debit. Additionally, 57 percent of PIN-secured debit users reported that having the choice to receive cash back at the POS results in more usage of their cards.
— Convenience and security are top reasons cited by respondents for using ATM/debit cards rather than another payment method. Other reasons consumers gave for preferring ATM/debit over other options were, “I do not like to carry cash,” “easier/simpler” and “faster/quicker.”
— Although PIN and signature debit have demonstrated transaction growth, preference of PIN debit over signature debit was 45 percent to 33 percent. Security was the leading response for choosing PIN debit as reported by 48 percent of respondents.
— Although grocery stores and gas stations continue to be popular venues for debit POS users surveyed, other merchant categories are generating interest and activity as more retailers and professionals, such as doctor’s offices and high-end retailers, offer debit as a payment option.
Debit POS Users Come in All Ages and Income Levels
— Consumers age 25-34 report the highest usage of PIN and signature debit at close to 16 total transactions per month overall. Yet, all ages demonstrate an affinity for debit, with the typical consumer conducting numerous transactions on a monthly basis. All age groups report higher average POS usage in 2005 versus 2004, with statistically significant increases in the 25-34 and 45-54 age groups.
— All groups report using PIN more than signature debit, with PIN-secured debit used in approximately 3 out of every 5 debit POS transactions overall.
— Debit POS usage is embraced by all income levels and is highest among those with household incomes of $40,000 and above. Those in the $80,000 to $100,000 income level report transacting with debit at POS most often, at 14 times per 30 days. In this group, debit volume nearly equals cash activity.