Debit Card Usage Surpasses Credit Cards in 2006

Since 2000, debit card transaction volume has grown at a 21% rate compounded annually compared to 6% for credit card transactions. But what is more interesting for credit unions is the how and where of this change in use of debit cards.


According to the 2007 edition of the ATM & Debit News EFT Data Book, people are pulling out their debit cards more often. In 2006, debit card usage surpassed credit card usage for the first time. Cardholders are on mark to conduct 26.6 billion transactions at the point-of-sale this year while credit card transactions are projected to be 24.4 billion.


Monthly Pin-Based Transactions
ATM 842 877 -4.0%
Point-of-Sale 840.2 684.2 22.80%
Total EFT 1,682.3 1,553.2 7.40%
Source: ATM&Debit News EFT Data Book Sept 2006
March data, in Millions, after eliminating duplication from gateway transactions

Debit card usage at point-of-sale locations grew nearly 23% between March 2005 and 2006 while pin-based transactions at ATMs, the traditional primary point-of-use, actually declined 4% during the same period, further emphasizing the trend that consumers are increasingly using debit to pay for their lattes as well as to get cash.

What Does it Mean for Credit Unions?

With debit card usage continuing to rise, members’ choice of their primary financial institution (PFI) becomes more important. Credit unions that are able to secure, and reinforce, this status will realize greater transaction volume and higher interchange income from members who utilize debit cards.

A case-in-point is Wings Financial Federal Credit Union ($1.6 Billion in Apple Valley, Minnesota) that already generates 29% of its non-interest income from debit card interchange due to high debit card usage among its members, compared to 16% from credit cards. Despite this already high number, to solidify its position as the PFI for their members the credit union, with 75% checking account penetration, is rolling out a cash-back debit rewards program for its members in 2007.

“We see debit cards replacing cash and checks” says Timothy Keegan, EVP/CFO for Wings Financial, “and since checking accounts are critical for member relationships, offering debit cards will allow us to serve our members better. We see this as an opportunity to give back.”

In an era of tight margins and slowing member growth, the ability to generate member-friendly non-interest income from sources such as this and maintain existing member relationships’ is critical to credit unions’ business model.

To learn how credit unions are getting their cards in their members’ wallets, join your peers on for our webinar on “Strategies for Driving Debit Card Usage,” brought to you by Callahan & Associates and sponsored by PSCU Financial Services.




Jan. 1, 2007


  • Overall very informative article. However, the percentages of non-interest income cited for Wings FCU are skewed by the fact that they incurred a $1.2M loss on sale of investments which lowered their overall non-interest income. Look behind the statistics if they seem unusually high. Industry publications do this regularly. The CU Journal in it's 11/29/06 edition listed the top 10 CUs based on their third quarter ROA's. One of the top 10 sold their credit portfolio during the year, and had an ROA of -.92% in 2005 versus their 3.58% annualized ROA as of 9/30/06. Statistics can be deceiving. Wings FCU does have an impressive penetration of their membership with their checking accounts, and the percentage of their non-interest income (adjusted for the $1.2M loss) is stll pretty good, but nowhere near as impressive as your article conveys.