Debit cards are growing more popular than credit cards in the US. This is according to Visa Inc’s latest 8-K filing released on March 9, 2021. According to the company, US debit volume jumped 31 percent and 16 percent in Jan and Feb (respectively) compared to last year’s results. Meanwhile, credit usage reduced 6 percent and 8 percent, respectively.
Though the 8-K report never revealed actual volume data for Q1, the overall volume of US payments increased 8 percent from 2020. Credit plummeted 6 percent, replaced by debit, which jumped an impressive 23 percent.
Under these broad categories, various payment types saw exponential growth. In Feb, Visa announced CNP or Card-not-present minus travel, increased 30 percent, and card-present payments plummeted 6 percent YoY.
In Feb, US payment volume went up 9 percent from last year but was still down 2 percent from January. Visa links this to the weather problems faced in week 3 of Feb and less benefit from stimulus funds.
“Debit usage grew more so in Feb, while credit usage began increasing back in Jan,” says Sanjay Sakhrani of Keefe, Bruyette & Woods.
As per the CNP payments, “the spend-by-merchant segment recorded the same trends but for fuel and travel payments which improved by 500 basis points. The volume of US payments increased moderately in March week one compared to End-of-Feb rate.”
Debit Has Snowballed Since November Elections
Another Logica report dabbed the Future of Money Report 2020 found US Customers would rather use debit cards than credit cards.
Logica is a San Fran.-based data company. For this particular poll, it studied over 1,000 American grownups across all generations, a cohort of 200 from ages 16 to 23. The weeks following the November election saw 38 percent of shoppers make all their in-person payments with a debit card to surpass credit cards, used by only 25 percent.
But the signs were crystal clear even pre-election. During the fall period (ahead of US elections), 41 percent used a debit card for in-person transactions than the 28 percent who used a credit card.
Consumer trends show an increasing liking for debit cards from way back in 2019 when 31 percent preferred debit over the 29 percent who chose credit. In the meantime, consumers are increasingly dropping the use of cash for in-person payments. It dipped 23 percent in 2020’s fall, put side by side with 2019’s 28 percent.
It’s only in web payments where debit & credit usage almost equals. 40 percent paid through credit cards and 38% opted for debit.
Author Bio: Michael Hollis is a Detroit native who has helped hundreds of business owners compare merchant accounts. He’s experimented with various occupations: computer programming, dog-training, accounting… But his favorite is the one he’s now doing — providing business funding for hard-working business owners across the country.