VISA U.S.A. said this morning its off-line debit card or Check Card is generating 31 transactions per second in the U.S. More than 46 million cardholders conducted more than one billion VISA Check Card transactions last year representing a 40% increase over 1995. Since 1991 VISA says the number of off-line debit transactions has increased nearly 800%.
According to Atlanta-based Brittain Associates, nearly 9.5 million U.S. households have replaced checks with VISA or MasterCard off-line debit cards at supermarkets alone. Brittain says almost 9 million households have replaced checks with debit cards at discount stores and nearly 7 million households have done the same at clothing stores. Brittains study, released last night, estimates U.S. annual sales volume attributable to off-line debit cards is approaching $95 billion.
While the popularity of VISA Check Card with consumers is unprecedented, merchants are not so thrilled. Merchants allege the cost of acceptance of such card products has impacted profit margins compared to the lower-cost-per-transaction of personal checks or regional/local debit cards. Also the lower standards for issuance of debit cards vs. credit cards recently prompted some major car rental companies to deny the use of VISA Check Card or MasterCard MasterMoney cards.
VISA USA EXECUTIVE SAYS VISA CHECK CARD HAS SURPASSED 1 BILLION TRANSACTIONS PER YEAR
Visa U.S.A. executive, William E. Stewart, will tell an audience of merchants in St. Petersburg on Tuesday, April 29, that usage of Visa check cards surpassed one billion transactions in 1996. Visa check cards are bank-issued ATM cards that “work like a check only better” at 13 million locations around the world where Visa is accepted.
Mr. Stewart, executive vice president of Visa U.S.A., will also tell the audience at the Equifax Check Services 1997 Customer Symposium, which is being held at the Stouffers Vinoy Resort from April 27th through 30th, that there are now more than 46 million U.S. consumers using the Visa check card, collectively conducting an average of 31 transactions per second — a 40 percent increase over 1995 and an almost 800 percent increase since 1991.
Debit cards, which were launched in the late 1970s, are one of the most successful new financial payment tools ever to be introduced, according to Mr. Stewart. Based on research conducted by Visa, consumers like the card because they feel it is easier to use than carrying cash or a cumbersome checkbook; it is faster than writing a check or waiting for change to be counted; and it improves personal accounting, making it easier to track purchases than it is with cash. Consumers also prefer the privacy of Visa check card transactions compared to checks, as no identification is required at the point of sale.
Mr. Stewart attributes the tremendous growth of debit cards to the fact that they are obviously “something consumers want and feel they need. Today’s consumer is looking for convenience and the Visa check card delivers that and more.”
Mr. Stewart will address the key issues retailers face as they prepare for a major step forward in payment automation, and expand on the phenomenal success of the Visa check card specifically, and debit cards generally.
In addition to discussing how and why consumers are eager to avail themselves of the utility and convenience of the Visa check card, Mr. Stewart will address the positives of the card for merchants, including speed of transaction authorization; and the security the card offers by way of guaranteed payment when proper authorization procedures are followed. He will also offer his insights into the future growth of the debit card and other payment methods.
Mr. Stewart, 52, is executive vice president of Operations and Systems for Visa U.S.A., responsible for coordinating Visa’s systems and operational staffs with their product and marketing counterparts. In addition, he is also responsible for customer service for Visa’s U.S. member financial institutions and business development initiative.
He joined Visa in 1989 as executive vice president and chief financial officer of Visa’s Asia Pacific region. As the architect of Visa’s financial and operational systems for the entire region, he introduced innovative systems to meet the challenges of developing markets such as Japan, China and Korea.
Prior to joining Visa, Mr. Stewart spent 22 years at IBM, where he held management positions in engineering, development, and finance.
Mr. Stewart earned a bachelor of science degree from the University of Colorado in 1966.
OFF-LINE DEBIT TRANSACTIONS REPLACING MANY CHECKS IN MILLIONS OF U.S. HOUSEHOLDS
The steady promotion and growth of VISA and MasterCard off-line debit cards are measurably changing the payment behavior of millions of U.S. households, according to a new consumer study conducted by Brittain Associates. Based on over 1,000 consumer interviews, Brittain Associates projects that there are nearly 9.5 million households that now use a MasterCard or VISA branded debit card in place of checks at supermarkets alone. These cards, presented for payment just like a credit card, deduct the payment amount from the owner’s checking account.
Almost nine million households also say they routinely replace a check transaction with a debit card at discount stores. Nearly seven million claim to replace checks with debit card payments when shopping at a clothing store.
Using even the most conservative estimate of supermarket visits per household per year (24 times), generates an estimate of over one quarter billion fewer paper checks written just in this retail category alone.
“Add in the other categories where checks have been a dominant form of payment, such as discount and clothing stores, and the actual impact on paper checks is huge,” says Bruce Brittain, president of the Atlanta financial services research firm.
“If the typical debit card using household replaced only four paper checks a month,” observes Brittain, “there would be over one billion fewer checks written and processed in the U.S. annually. A billion of anything commands some attention.”
The study data also indicate that the annual U.S. sales volume attributable to off-line debit cards is approaching $95 billion.
“We asked about recent usage frequency and charge volume when we interviewed debit card owners.” says Brittain, “Our resulting annual sales volume estimate supports the combined VISA and MasterCard sales volume data from the first six minths of 1996 when continued volume growth during the last half of 1996 is factored-in.”
The nationally projectable study was conducted between March 21 and 27, 1997. The study included telephone interviews with 1,014 adults living in the Continental U.S.
Beginning May 12, 1997, portions of this study will be available on the company’s web site, www.brittainassociates.com.