Emerging trends in debit

Historically, the debit audience has been comprised of older consumers with lower incomes living in suburban areas*. But that may be changing. Nearly one-third of U.S. debit users have increased their usage in the past 12 months, and the gains are coming from new audiences*.

Who’s driving the increase in debit usage?

Younger U.S. debit users, Gen Z and Millennials, are more likely to have increased their debit use in the past year. In fact, in a recent Visa survey, both groups reported increased debit card use 44-45% over the prior 12 months*.

What’s motivating greater debit usage?

In the United States, higher debit use appears to be driven by overall satisfaction with debit as a payment method, as well as an increase in online shopping*. U.S. users value debit for its convenience, security and budgeting capabilities, making it their preferred payment method for transactions under $100 (though cash is still king for small in-store payments). When it comes to Ecommerce, security continues to be the top concern for debit users. U.S. debit users reported feeling safer using their debit card in-store than using it online*. It’s important to reinforce education around the security benefits of using debit.

What factors determine preference?

While debit cardholders with heavier usage and Millennials trend toward having more debit cards and banking products in general, the majority of debit users have more than two debit cards and more than one checking account*.

So how do they choose which card to use? The vast majority stick with the debit card from their primary financial institution*— defined as either where they deposit their paycheck or where they have banked the longest. And these debit users tend to be overwhelmingly satisfied with their primary financial institution — 86% reported a level of satisfaction of either extremely satisfied or very satisfied*. Importantly, debit users are also more likely to be interested in acquiring new products from their primary financial institution*.

Of course, even with these high levels of satisfaction, 13% said they definitely or probably will switch their primary financial institution in the next 12 months, while 18% were on the fence*. Switchers are more likely to be higher-income, urban Millennials, mobile wallet users and traditional financial institution users. Perhaps tellingly, they were also more likely to have experienced fraud in the past*.

What’s the best way to capitalize on these emerging trends?

While the new audiences and recent increase in debit usage are significant, it’s important not to leave anyone behind. You can start focusing on the segments that are currently driving the increase of debit card usage while still meeting the foundational needs of more established debit users. A cash and debit trends study in 2022 revealed that debit payments have accounted for roughly 30% of the decline in cash usage for small transactions**.

Traditional debit cards’ built-in security and convenience resonate with users. And while concerns related to Ecommerce may currently be driving a switch to credit cards for purchases at lower price points, providing clear, concise education (such as a “how-to-use” primer and guide to security features) could help cardholders feel more confident in using debit cards for online purchases.

Young and digital savvy consumers are also more likely to have multiple banking relationships*, so it’s important to differentiate the value you can provide — whether that’s enhanced customer support, money management tools or digital banking features that can help motivate consumers to choose your financial institution as their primary one. If you want to avoid losing share of spend to cash back cards and other competing products, consider offering rewards programs to consumers for debit. Contactless also represents a big opportunity for increasing incremental transactions and spend. Securing this relationship will be vital for maximizing cross-sell opportunities, as interest and ownership of banking products is higher with a consumer’s primary financial institution.

* U.S. Debit Card Landscape & Primacy Insights, Visa/Murphy Research, August 2022

** 2022 Visa Cash & Debit Source of Volume Study, April 2023