Next-Gen Debit

Debit Leads Payments Preference Parade

debit card online shopping

In disasters of the recent past there has been a marked shift away from credit toward debit. Households and even small and medium-sized businesses (SMBs) tend to conserve during troubled times, economic or otherwise.

This time, the charm of options — debit or credit — has made payments preference a key factor in the success or failure of businesses as they reopen and reinvent.

PYMNTS’ latest Next-Gen Debit Tracker® done in collaboration with PULSE, a Discover company, delves into debit trends like that, exploring options that merchants and their payments tech partners are using to keeping volume up as the economy reopens.

“Understanding consumers’ new approaches to commerce can help merchants and FIs cater to customers’ needs during the pandemic and anticipate which behavioral changes may continue into the future,” the Tracker states. “Consumers are … rethinking whether they should be paying for goods with cash, credit cards or debit cards. Concerns about the virus lingering on paper bills or POS terminals have made some consumers and merchants favor digital purchasing. Consumers must also consider whether it still makes sense to use credit when cash is tight, or if doing so will put them into debt that could become harder to pay off as job losses deepen.”

Merchants Fastrack Evolution

As COVID-19 learnings are synthesized, merchants are finding that payments preference and choice played a significant role in digital purchasing decisions during the lockdowns.

“At PULSE, we are seeing merchants evolve their business models to offer consumers the payment options they expect,” PULSE Executive Vice President of Product Management Jennifer Schroeder told PYMNTS.

“In some cases, this means implementing contactless payments at the point of sale, and in other cases, the efforts are focused on offering a variety of checkout experiences, like ‘pay and pick up.’ PULSE supports all of these transaction types whether they originate inside a store, in-app or online,” Schroeder said. “Learnings and data from prior economic downturns tell us that consumers will prefer debit over credit in uncertain times. It is likely that consumers will never again shop the way they did before the pandemic, whether for reasons of safety or convenience. In either case, PULSE and the payments industry remain focused on ensuring consumers can pay any way and anywhere they want using a debit card.”

It may be most prevalent in grocery payments now, as consumers adjust buying behaviors. That activity can be extrapolated and is showing up in other verticals as well.

“Credit union service organization (CUSO) PSCU reported that, among its members’ customers, debit spending at grocery stores was up 10 percent year over year for March 17 to March 23,” the Tracker states. “This purchasing continued to rise, with the week of April 6 to April 12 seeing debit card spending at grocery stores hit a level that was 17.3 percent higher than PSCU had seen during the same period in 2019.”

eCommerce and Debit: Not Exclusive

Debit is clearly perceived as a safe haven for consumers when times get tough. But credit usage has actually increased 3.4 percent since January, mostly in settings like in-store retail especially. It shows there’s life for credit, and there’s power for merchants in offering payments choice.

Double that for eCommerce, where payment choice is now a factor in numerous conversions.

“eCommerce volumes have grown significantly, [not just] in terms of overall transaction count but also in average ticket size,” Schroeder told PYMNTS. “Consumers are not only turning to these merchants for everyday items, but also for entertainment. Streaming services — both video and music — and gaming services have seen a significant uptick in debit payments as consumers have enrolled as a way of entertaining themselves and family members as they adhere to shelter-in-place orders.”



The September 2020 Leveraging The Digital Banking Shift Study, PYMNTS examines consumers’ growing use of online and mobile tools to open and manage accounts as well as the factors that are paramount in building and maintaining trust in the current economic environment. The report is based on a survey of nearly 2,200 account-holding U.S. consumers.