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Debit growth expected to weaken 5/1 DTN Perhaps the hottest payment product going for the past several years, debit cards are showing signs of cooling off. ‘It’s almost become a broken record that debit transactions are growing at double-digit rates, but we’re seeing a slowing in that rate,’ Tony Hayes, Oliver Wyman, said. Issuers expect a marked slowdown in growth this year. The survey was conducted in February & is the third sponsored by Pulse. Respondents forecast overall debit transaction volume will grow 12.1% this year, down from the 16.8% forecasted in last year’s survey. Their predicted growth rate for signature debit (12.5%) somewhat exceeds their expectation for PIN debit growth (11.8%). Both forecasts fall short of sunnier expectations last year, which were 16.2% for signature & 17.7% for PIN. Debit card payments secured by signatures flow through the national bank card networks & carry higher interchange rates than those for PIN-authenticated debit transactions, which are handled by the regional EFT networks. Indeed, transaction growth for signature- & PIN-based debit cards ranked as the #1 concern among the 62 banks & CUs surveyed, with 68% of the respondents citing it. Major issues outranked by growth concerns included fraud losses (66%), PIN prompting by merchants (56%), & pressure on interchange rates (42%). ‘There’s pressure to maintain that momentum for growth.’ The study found that the mix of signature & PIN transactions is remaining more or less stable, with signature-based payments representing 65% of debit traffic. Even so, the study found a significant range in this measurement among individual issuers, with those in the lowest quartile reporting 48% of transactions secured by signature & those in the highest reporting 80%. While the overall average interchange revenue per active card came to $78, the range was $34 at the low end up to $103 among issuers in the top quartile. Issuers report they are taking a number of steps to counteract the slowdown in growth, including stronger marketing to attract new users among younger customers (including positioning the linked account as a ‘debit’ account rather than a ‘checking’ account) & more refined segmentation of cardholders to yield better results on target marketing. One other interesting result revealed by the survey was the high ranking among issuer concerns for decoupled debit cards, which were cited by 20% of respondents. Capital One made decoupled debit a headline item only last June when it announced a new cobranded card product that can debit funds from any checking account at any bank through the automated clearing house network. In thus severing the conventional link between debit cards & checking accounts from the same bank, the decoupled debit card concept has stirred controversy in the electronic-payments industry. The financial institutions included in the survey represented a range of banks & CUs by size, network used & location, & accounted for 74.2m debit cards.