The Green Sheet Online Edition

Has debit use peaked?

Mercator Advisory Group's newly released report, Debit Cardholders: Calm Before the Storm, highlights consumers' growing use of debit cards in 2010. The report reflects what may be a period of peak usage prior to the significant impending changes to debit pricing that implementation of the Durbin Amendment to the Dodd-Frank Act will bring.

Based on a national sample of 1,009 consumers completed in May 2010, the report outlines consumer patterns of debit card ownership, usage, preferences for PIN versus signature transactions, awareness of overdraft reform legislation, participation in alternative and decoupled debit programs, and participation in debit card rewards programs.

Report highlights

Findings from the report include the following:

• Cardholders are almost evenly split among the following responses when asked about their favored transaction methods: PIN, signature and "no preference." But when requested by the merchant, a majority of respondents said they comply with a request to enter their PIN.

• Private label (decoupled) debit programs sponsored by retailers have gained just a small foothold among debit cardholders.

• Debit reward program participation is not dominant among cardholders; only a minority of participants have ever redeemed rewards.

"Looking at the positive achievements of consumer debit programs through our newly acquired Durbin Amendment lens, we must highlight the attributes most likely to change (such as rewards programs), procedures potentially causing confusion (such as PIN versus signature transactions), or programs that may experience collateral damage (such as decoupled debit programs)," said Ken Paterson, Vice President for Research Operations at Mercator Advisory Group.

News from the cyber fraud front

Cybersource Corp.'s 12th Annual Online Fraud Report indicates that, in 2010, the average percent of online revenues lost to payment fraud ranged from 1.1 percent for small merchants to 0.4 percent for the very largest merchants.

Opportunities in India

The Mercator Map of India: An Overview of the Subcontinent's Payments Market report provides an overview of the Indian banking; credit, debit card and prepaid card; and emerging payment technology markets. "For those who understand it, the Indian payments market presents tremendous opportunity," said Ben Jackson, Senior Analyst of Mercator Advisory Group's Prepaid Advisory Service.