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Pandemic Fuels Rise in US Consumer Debit Spending

Card-not-present (CNP) transactions soared with the shift to digital commerce

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  • Written by  Banking Exchange staff
Pandemic Fuels Rise in US Consumer Debit Spending

US consumers made fewer but larger debit purchases in 2020 in response to the COVID-19 pandemic, boosting US debit volume to $3.4 billion, the 2021 Debit Issuer Study has found.

For the first time in 16 years of the study, which was commissioned by Discover Financial Services’ PULSE debit network and conducted by Oliver Wyman, debit transactions declined to a total of 76.1 billion compared to 78.1 billion in 2019.

Meanwhile, total debit spending increased by 8%.

The study also found the average ticket size increased more than 10%, the largest upswing in the study’s history, from $40.50 to $44.80.

Tony Hayes, partner and global payments team lead at Oliver Wyman, said: “With many restaurants and retail locations closed for several months in 2020, generally people headed out less often which meant fewer debit purchases, but they stocked up when they did go out for groceries and other necessities.”

The study also identified several merchant categories that expanded last year as a result of shifting spending patterns. Digital goods did well out of the COVID-19 pandemic, rising 40%, as well as home supply stores which rose 22%. Conversely, transportation declined by 53%, restaurants and bars by 18% and fast food by 10%.

The study highlighted the shift to digital commerce, meaning that card-not-present (CNP) purchase transactions increased 23% year-over-year. Total CNP transactions amounted to 34% of debit transactions in 2020.

Steve Sievert, executive vice president of marketing and brand management at PULSE, said: “The shift to digital commerce and card-not-present transactions, adoption of contactless and use of debit for money transfers all leaped forward at warp speed.”

The study also found the rollout of contactless debit cards was increasing, with contactless functionality rising from 11% of all debit cards in 2019 to 30% in 2020.

This echoes research by National Retail Federation (NRF) and Forester found out that consumers were worried about touching surfaces during the pandemic, leading to the rise in contactless transactions.

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