PULSE 2008 Debit Issuer Study Reveals Continued Debit Growth and Potential for Improved...

Initial Findings of Comprehensive Survey Include Issuer Performance Comparisons, Fraud Trends and Issuers' Outlook for Debit Card Business

Summary:

* Survey Sample Represents 28 Percent of Debit Cards Issued in U.S.

* Issuers Experienced Transaction Growth of More Than

* "Best-in-Class" Issuers Outperform Market, Demonstrate Tremendous Potential in Debit

* Fraud Remains Top Concern

HOUSTON -- Highlighting consumers' increased use of debit, U.S. financial institutions experienced continued growth in debit card transactions in 2007, according to a new study commissioned by PULSE. The 2008 Debit Issuer Study also revealed superior performance by "best-in-class" issuers, suggesting significant untapped potential in debit for many financial institutions.

The study, conducted by Oliver Wyman, provides new data and comparisons to the results of the 2007 Debit Issuer Study, released in February 2007. This comprehensive study offers a revealing look at debit issuer performance in key metrics, recent debit card fraud trends and debit issuers' outlook for the industry in 2008.

Overall, the issuers surveyed experienced debit transaction growth of 14.4 percent in 2007, comprising a 15 percent increase in signature debit transactions and 14 percent growth for PIN debit. Although transaction growth remained strong in 2007, it was lower than the 18 percent growth rate experienced in 2006 by participants in the previous PULSE study.

"Despite having a strong year in 2007, issuers are implementing a number of programs aimed at improving the performance of their debit card programs in 2008," said Cindy Ballard, PULSE executive vice president. "These efforts center on rewards programs, targeted cardholder promotions and expansion into new products and new merchant categories."

A total of 62 financial institutions participated in the study, including large banks, community banks and credit unions that collectively issue more than 74 million debit cards, or 28 percent of the debit cards in the U.S. The institutions also represent 46,000 ATMs and are balanced across institution size, type, geography and network participation.

Issuer Benchmark Performance

The issuers surveyed by Oliver Wyman indicated that 86 percent of their debit cards are signature-capable, with 14 percent being ATM/PIN-only cards. This is essentially unchanged from the 2007 study. In addition, approximately 20 percent of survey respondents said they are planning to convert at least some portion of their ATM/PIN-only cards to dual-capability (PIN and signature) cards during 2008.