Study: Pandemic Spurred Debit Usage for Online Transactions

Study: Pandemic Spurred Debit Usage for Online Transactions

August 19, 2021

U.S. consumers reduced the number of transactions they performed using debit cards in 2020, but increased overall spend during the pandemic. Also, debit use for card-not-present transactions soared as pandemic-induced lockdowns led to sharply higher online spending compared to the year before, according to a new report from debit network PULSE.

The 2021 Debit Issuer Study found, despite an overall decrease, that card-not-present transactions per active card rose 23 percent in 2020 compared to 2019. The Discover-owned debit network, which has commissioned the study annually for 16 years, found that CNP transactions (which include account-to-account money transfers) comprised more than a third of all debit transactions in 2020.

In addition to the number of transactions, total dollars spent on debit cards in card-not-present environments rose 21 percent year-over-year. As a result, fraud surged in the channel, as well. While one-third of debit transactions were CNP, they accounted for approximately 70 percent of net fraud claims and half of net fraud losses for issuing banks.

The study noted that, due to network liability rules, CNP claims do not necessarily translate into greater net fraud losses for issuers, but they still require substantial time and represent a major operational cost.

“Effective fraud management remains a top priority for issuers in 2021,” the report’s authors wrote. “Fraud alerts and card freezes are gaining in prominence as issuer-supported capabilities to help cardholders secure their cards.”

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