STRATEGIC PARTNERS
August 13, 2002
HOUSTON -- A national study reveals that almost three-quarters of all U.S. financial institutions do not charge their debit cardholders any fees for processing online PIN-based transactions, and none charged for making offline signature-based purchases.
Commissioned by the Pulse EFT Association and conducted by Dove Consulting, the survey involved a representative group of large banks, community banks and credit unions that combined have issued more than 80 million debit cards.
According to the study, only 26 percent of financial institutions surveyed impose a transaction fee on all or part of their debit cardholders; 74 percent impose none.
Only 12 percent of financial institutions impose a transaction fee on all debit cardholders when they make an online, or PIN-based, purchase. Another 14 percent of institutions charge a fee to a portion of their debit cardholders. Transaction fees range from 25 cents to one dollar, with the average being 50 cents.
No card issuers surveyed imposed fees for offline debit purchases.
Among all cardholders (active and inactive), consumers perform an average of 2.2 online and 3.6 offline debit transactions per month. Imposition of a charge effectively reduces transaction activity by 40 percent.
Online debit transactions grew by 25 percent last year, while offline debit transactions rose by 22 percent.
Stan Paur, Pulse president and chief executive officer, said that Pulse was interested in the dimensions of charging for online debit as well as the implications when fees were imposed by the card issuer.
"The decision by a small percentage of financial institutions to charge a fee to date seems to have little effect on the overall growing acceptance and utilization of online debit," Paur said.
However, Paur noted that it is obvious from the survey that the imposition of fees could impact transaction volumes.
Beyond the findings related to online transaction fees, the PULSE-Dove survey revealed almost universal industry expectation of continuing strong growth in debit transaction volume. Card issuers project such transaction growth to average 21 percent for online and 15 percent for offline debit between now and 2003.
