Debit Cards Take By Far The Largest Share Of Non-Cash Transactions In The U.S.

More than 50 billion transactions were powered by debit cards in the United States last year, more than one-third of total non-cash transactions, according to BI Intelligence estimates based on recent Federal Reserve data.

The debit card’s growing dominance of the payments landscape is the most dramatic instance of the rise of electronic payments over paper-based checks.

  • The 50.6 billion debit card transactions represent growth of 7.7% over the 47 million debit card transactions in 2012.
  • Credit cards account for about half as many transactions, at 28 billion.
  • Check-based transactions have plummeted over the last decade, falling from 37 billion in 2003 to only 17 billion in 2013, according to our estimates.

Credit cards do still see a higher average order value than debit cards — at $US94 versus $US39.

As a result, credit cards have retained a greater share of dollar-based transaction volume, compared to debit cards.

But in terms of frequency of use, debit cards easily win out.

The rise of debit cards has been steady over the last decade. Around 2004, debit card transactions exceeded credit card transactions for the first time.

Since then, debit cards have continued pulling far ahead of credit cards in terms of number of transactions.

Unlike the four other other non-cash instruments the Fed tracks in this data, credit card transactions are directly linked to banks’ willingness to lend. Banks’ appetite for extending consumer credit took a hit in 2008, and only recently has begun to bounce back.

In contrast, debit card transactions aren’t approved unless the bank customer has the necessary funds in their account.

Our numbers are from the Fed’s December 2013 Payments Study. The study only included data through year-end 2012, but we used historical growth trends to also estimate 2013 numbers.

Click here to download this chart in Excel.

Automatic clearing house or ACH transactions — electronic payments such as direct deposits made directly between banks — increased nearly as quickly as debit card payments between 2003 and 2012.

ACH transactions had the highest average transaction value, at $US2,186 in 2012.

Prepaid card transactions, including benefits, gift, and payroll cards, also achieved significant growth. Prepaid cards grew at a 30.7% compound annual growth rate from 2003 to 2012.

Another likely factor in the rise of electronic payments is the popularity of mobile and e-commerce. Most transactions online are powered by credit or debit cards.

Here’s a look at the share of non-cash transactions by payment type in 2013.

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