Benchmarking Debit Issuer Performance – 2014 to 2016


Navigator Edition: March 2017
By: Melissa Fox and Chris Razzano

A recent First Annapolis Consulting survey showed that leading debit issuers continued to experience strong portfolio performance in 2016, with year-over-year transaction growth in the high single-digits.

Issuers averaged 24.5 debit transactions per active card per month in 2016, with average monthly spend per active card of $928 (see Figure 1). Results are based on quarterly data provided by 12 U.S. issuers representing 113MM debit cards (approximately 30% of cards issued) as part of First Annapolis’ ongoing Debit Issuer Benchmarking Study, which has been tracking participating issuer performance since 2013.

Figure 1: 2016 Performance Metrics
Issuer Average, Participant Range*Defined as 1 POS transaction within the past 30 days.
Source: First Annapolis Consulting, Debit Issuer Benchmarking Study.

Most issuers in our sample experienced positive growth in their total card base (i.e., number of debit cards issued) over the past two years, combined with a decline in active card rates, potentially due to issuer-specific EMV migration patterns. Issuers’ total card bases expanded at an average annual rate of 4.1% between 2014 and 2016, while the average active card rate decreased 1.6%-points, from 65.9% to 64.3%. Overall, issuers’ active card bases increased an annual rate of 4.0%, on average.

Per-active card metrics have improved since 2014:

  • Average monthly transactions increased from 23.1 to 24.5 (an average annual increase of 3.0%);
  • Monthly spend increased at an annual rate of 1.9%, resulting in a slight decrease in average ticket size, from $38.90 to $38.07, which is consistent with the trends shown in the Federal Reserve’s most recent Payments Study.

As a result of both card base increases and improved performance metrics, issuers’ debit transaction volumes increased at 7.0% CAGR from 2014 to 2016, on average (see Figure 2).

Figure 2: Change in Debit Growth Drivers
(2014-2016 CAGRs)

Source: First Annapolis Consulting, Debit Issuer Benchmarking Study.

Over the last two years, EMV migration has been a primary focus for most issuers, and many issuers are still converting their portfolios. First Annapolis collected EMV data from a subset of participating issuers beginning in Q1 2016 to track the shift to EMV cards and growth of chip-based transactions. As of Q4, 72% of participating issuers’ cards were EMV-enabled, compared to 52% in Q1, with an average active card rate of 76%. These issuers averaged 9.5 monthly chip-based transactions per active EMV card in Q4, up from 1.5 in Q1. As of Q4, chip-based transactions represented 26% of their total transactions, on average, compared to 4% in Q1.

With all of the changes taking place around the debit card form factor—the effort required to coordinate an industry-wide shift from mag-stripe to chip technology, while at the same time navigating the early stages of a shift from plastic to digital–it is easy to lose sight of the underlying fundamentals of debit growth. Rest assured: debit remains a healthy and vibrant payment mechanism, with a strong outlook for continued growth.

For more information about the study, or to become a participant, please contact Melissa Fox, Senior Manager, melissa.fox@firstannapolis.com, or Chris Razzano, Senior Analyst, chris.razzano@firstannapolis.com. Both specialize in Payments Strategy & Innovation.

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