Since the pandemic, consumers have continued to increasingly rely on digital payments. As Discover Financial Services reveals in its latest study, almost 80 per cent of issuers saw an increase in the use of mobile wallets in 2022, showing no sign of a slowdown in this trend.
The 2023 PULSE Debit Issuers Study, commissioned by Discover Financial Services’ PULSE debit network and conducted by West Monroe, finds consumer demand for digital experiences, mobile self-service capabilities and fraud management is commanding the attention of financial institutions.
Mobile wallet transactions at the point-of-sale rose more than 87 per cent YoY. The study reveals that increased mobile wallet use is being fueled by greater consumer awareness and merchant adoption of NFC-enabled payment terminals.
Meanwhile, the sharp growth over the past two years in account-to-account (A2A) transactions, which include peer-to-peer payments, business-to-consumer disbursements and gig-economy wage payments, moderated in 2022 with a six per cent YoY increase.
Steve Sievert, executive vice president of marketing and brand management at PULSE, discussed the findings: “After two years of historic disruption in payments, 2022 was a year for the industry to catch its collective breath and ensure investments are truly meeting the needs of consumers.
“This year’s study found consumers further embraced contactless cards and mobile payments, while many issuers are focused on securing a top-of-digital-wallet position for their debit cards.”
Following the volatility experienced during the pandemic, issuers also reported slight growth in the total number of debit transactions, up one per cent YoY in 2022, while dollar volume increased by three per cent.
Investing in mobile app capabilities and fraud prevention
With consumers favouring seamless digital experiences and mobile capabilities, issuers are seeking to keep pace by prioritising customer experience. Around 35 per cent of respondents reported accelerating the rollout of new digital capabilities in 2022, with an emphasis on self-service features.
Many issuers are also investing in a broad range of mobile-app capabilities that allow consumers to perform functions such as ordering, activating, freezing or unfreezing a debit card.
Nearly 90 per cent of issuers reported increased attention to fraud issues, and nearly 45 per cent said fraud initiatives were high-impact. Meanwhile, 76 per cent of respondents reported enhancing their fraud models to reduce fraud losses and false positives, which negatively impact cardholders. Four out of 10 said they are working to improve the cardholder-dispute experience.
The study found a slight improvement in debit key performance indicators from 2021 to 2022. Debit usage per active card remained flat YoY, at more than 29 transactions per month. Debit penetration rates rose marginally to 84.5 per cent of accounts (up 0.2 per cent), and the active rate (the percentage of issuers’ debit cards used regularly) increased slightly to 68.6 per cent (up 1.2 per cent). The average debit ticket increased 2.4 per cent to $48.49 per transaction, likely due to inflation.