U.S. Debit Volume Trends in 2012

Navigator Edition: August 2012
By: Frank Verhaegen and David Abraham

The quarter ending June 30, 2012 was the first in which the network non-exclusivity provisions of the Durbin Amendment were in force. As expected, several debit networks reported significant volume jumps in the quarter as a result. MasterCard maintained constant debit volume at $111 billion over the most recent quarter while posting a 13.2% gain in debit purchase volume year-over-year. Fiserv’s ACCEL/Exchange and Discover’s Pulse posted 16% and 13% gains in PIN debit purchase volume, respectively. STAR and NYCE reported increases in revenue but did not provide volume details. Most of these gains can be attributed to expected volume losses at Visa, the largest debit network, whose Interlink network volume was down 54% from the prior quarter. Overall, Visa debit volume declined 6.4% from the prior quarter.

When looking at debit activity at major financial institutions, Bank of America reported a 3.2% jump in purchase volume and U.S. Bank announced a 4.5% increase in transaction volume in their Q2 2012 releases. Bank of America has fully recovered to purchase volume levels seen prior to the backlash against proposed debit card fees in September 2011. These limited data points suggest debit growth could be returning to pre-Durbin level, although such conclusions could be premature given the number of variables in play.

We expect network volumes to be fairly volatile in the coming quarters as merchants and acquirers implement least cost routing strategies. The volatility will likely continue as all participants react to changes in the competitive landscape.

Figure 1: U.S. Quarterly Debit Purchase Volume – V/MA
($ Billions)

Sources: Network quarterly releases and First Annapolis Consulting analysis.
Note: Data above are not to scale. Purchase volume includes Interlink and Maestro. Q2 denotes debit volume activity between April-June.

For more information, please contact David Abraham, Consultant specializing in Deposit Access, david.abraham@firstannapolis.com; or Frank Verhaegen, Senior Analyst specializing in Deposit Access, frank.verhaegen@firstannapolis.com

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