Having the option to make debit payments either using PIN or signature correlates with an increased consumer transaction count, according to a survey by Star Networks Inc. (a First Data company).
The independently conducted Star Consumer Payments Usage Study found that consumers who make both PIN and signature debit payments conduct an average of almost 23 transactions per month, compared to an average of 14 for those who make only signature-based payments and 10 for those who make only PIN payments.
The survey data also points to the continued growth of debit activity at the point of sale (POS). Over the past five years, consumers' average POS debit activity has grown from less than 8 transactions per month to more than 11. The average number of debit POS transactions made monthly in the US increased by 21% over the past twelve months, from 15 to 18 per month, per consumer.
Although PIN and signature debit both showed growth, PIN debit was preferred (45%) to signature debit (33%). Security was the main reason cited for choosing PIN debit (48%). Additionally, 57% of PIN debit users felt that having the choice to receive cash back at the point of sale also resulted in greater usage of their debit card.
Among the study's main findings concerning debit payment behaviour:
- 62% of ATM/debit cardholders reported using their ATM/debit cards at the POS in the 30 days prior to the survey. Over the past five years, consumers' average POS debit activity has grown from less than eight transactions a month to more than 11.
- Among all card users, 45% of consumers report using both PIN and signature methods, an increase from 2005's 39%. The number of respondents using both is significantly greater than those who report using a single method.
- Using both methods has a major effect on transaction volume: Those who use both PIN and signature debit account for 75% of all debit POS transactions made.
- The expanding number of locations accepting debit, particularly for small-ticket purchases, underscores the value of promoting both PIN and signature debit to consumers. Among respondents, PIN debit is the preferred debit option at discount stores, convenience stores, drug stores and do-it-yourself stores, while signature debit leads in food categories and specialty retail locations.
- The average cardholder surveyed conducts 58% more transactions per month when given the option to use both signature and debit.
- 57% of PIN-secured debit users reported that having the choice to receive cash back at the POS results in more usage of their cards.
- Convenience and security are top reasons cited by respondents for using ATM/debit cards rather than another payment method. Other reasons consumers gave for preferring ATM/debit over other options included: "I do not like to carry cash", "it's easier/simpler", and "it's faster/quicker".
- Although grocery stores and fuel retailers continue to be popular venues for debit POS users, other merchant categories are generating interest and activity as more retailers and professionals, such as doctor's offices and high-end retailers, offer debit as a payment option.
- Consumers aged 25 - 34 reported the highest usage of PIN and signature debit at close to 16 total transactions per month overall. However, all ages demonstrated an affinity for debit payments, with the typical consumer conducting several transactions each month. All age groups reported higher average POS usage in 2005 than in 2004, with statistically significant increases in the 25-34 and 45-54 age groups.
- All groups reported using PIN more than signature debit, with PIN-secured debit being used in approximately 3 out of every 5 debit POS transactions.
- Debit POS usage has been adopted by all income levels, but is highest among those with household incomes of US$40,000+ per year. Those in the US$80,000 - US$100,000 income bracket reported using debit the most often, at an average of 14 times every 30 days. In this group, debit volume nearly equals cash activity.
Now in its 19th edition, the study aims to help merchants better understand consumer electronic payments usage habits and attitudes. Directed by Applied Management & Planning Group, the study took into account responses from some 14,000 consumers in 35 US states.