Debit card transaction volume in the US totaled $907 billion in 2005, according to a new report from Packaged Facts, and by 2010, annual debit card transactions will exceed $2 trillion.

Almost half (48.2 per cent) of adults in the US carry a debit card and as prepaid debit cards entrench among the 48 million unbanked consumers in the US, credit cards and cash will lose transaction volume to debit cards. Current growth rates are attributed by Packaged Facts to greater check card use by young consumers, recurring bill payments and online debit card use.

Visa USA for example indicates that in Q1 2005, Visa check card use for online purchases accounted for 52 per cent of all Visa card-facilitated online purchases for the first time in history. In the wider market, over USD 800 billion in signature- and PIN-secured debit card transaction volume was achieved in 2005, and is soon predicted to exceed credit card transaction volumes. Rewards programs will be a key tool for debit card issuers seeking to maximize the profit and success of their programs, which can be harder to accrue and quantify than credit card programs.

Debit card issuers in the banking and non-bank sectors are accordingly seeking innovative ways to increase card volume and offset revenue that is lost to retail payment products or services. Half a dozen fees can impact each debit card transaction, while issuers are seeking profits for rewards programs and to counteract merchant campaigns for reduced interchange and discount rates. While card issuers, merchants and payment networks have battled for ten years over debit card fees, the fact that card volume grew in this time is both significant and positive for the industry.