STRATEGIC PARTNERS
November 29, 1999
HOUSTON -- A new study commissioned by the PULSE EFT network documents significant shifts in patterns in EFT volume and predicts that online debit transactions at the point-of-sale will lead overall growth over the next two years. Conducted by Boston-based Dove Consulting Inc., the study projects annual growth in online debit transaction volume of more than 17 percent over the next two years. At the same time, the report predicts a flattening of ATM volume growth, with a likely industry increase of only 1.3 percent annually. "The finding supports a bullish outlook for the EFT industry," said Tony Hayes, director at Dove Consulting. "We expect overall ATM volume to experience marginal expansion -- but not decline -- while online debit becomes the growth engine for the EFT industry." According to the study, ATMs are a relatively mature payment product, with more than 227,000 now deployed nationwide. Yet POS, or online debit, is just now achieving critical mass and is on the upswing of the growth curve, with significant volume potential remaining. The report points out that total industry online debit volume averaged 68 percent annual growth over the five-year period from 1994 to 1999. PULSE President and CEO Stan Paur noted that PULSE's online program, PULSE PAY, experienced similarly strong growth, and in 1998 exceeded PULSE's ATM volume for the first time. "Clearly, more and more consumers are availing themselves of the convenience and economy of using their ATM cards to conduct electronic payments at merchant locations across the country," Paur said. Paur said the study was undertaken after the network industry saw signs that ATM volumes were either growing modestly or declining. Paur indicated that a variety of factors have influenced consumer behavior relative to ATM usage, including the availability of cash back at POS, the growing use of signature-based debit and consumer reaction to ATM convenience fees. He noted that his own network has posted lower totals in ATM transactions in three out of the past four months this year. The report makes note that the growing prevalence of ATM convenience fees has contributed to the leveling off of volume growth as more consumers find and utilize options to avoid the fees. Paur said that the finding supports PULSE's earlier assertion that the free market would make proposed government price controls on such fees unwarranted and unnecessary. The study is based on an evaluation of historical ATM and online debit transaction volumes and input from selected PULSE member financial institutions. Variables considered range from ATM surcharging, to cash back at the POS, to alternative payment products and Internet commerce. Other notable studies commissioned by PULSE include the "1999 ATM Deployer Study" and 1997's "The Future Use of ATMs."
