The payments landscape has evolved significantly in recent years, with regulatory changes and technological advances creating a number of interesting dynamics that affect a consumer’s choice of spending vehicle.
For starters, the Durbin Amendment robbed banks of $8.4 billion in annual revenue by capping debit card swipe fees. Banks have, in turn, eliminated most of their debit card rewards programs and emphasized unregulated products like prepaid cards – which accounted for 10.5% of all card payments in 2018, according to the Federal Reserve. They’ve also deemphasized brick-and-mortar branches in favor of less-costly online accounts.
The credit card market has undergone a great deal of upheaval as well, with underhanded, predatory issuer practices necessitating the passage of significant pro-consumer legislation: the Credit CARD Act of 2009. Issuers have since focused most of their efforts on attracting consumers with above-average credit standing, creating something of a competition vacuum at the low end of the credit spectrum.
What results in an environment in which consumers are exploring a number of different options to meet their spending, payment, and everyday banking needs. As such, debit and prepaid card market penetrating reveals a great deal about consumer habits and the payment industry’s hierarchy.
Debit Cards
U.S. Debit Card Circulation (in millions)
| Info | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | 2007 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Mastercard | 299 | 257 | 233 | 210 | 199 | 189 | 185 | 172 | 157 | 143 | 133 | 123 | 123 | 124 | 113 |
| VISA | 779 | 653 | 629 | 577 | 542 | 527 | 484 | 469 | 439 | 423 | 420 | 418 | 394 | 333 | 321 |
| Total | 1078 | 910 | 862 | 787 | 741 | 716 | 669 | 641 | 596 | 559 | 540 | 542 | 517 | 457 | 434 |
U.S. Debit Card Circulation (in millions)
- 85% of U.S. adults have at least one debit card (across all age groups, income brackets, and education levels).
(Source: Research and Markets, 2022 U.S. Consumer Payment Choice: Understanding Debit Card User Preference)
- 57% of total payments in 2021 were made with credit cards and debit cards.
(Source: Federal Reserve Bank, “Diary of Consumer Payment Choice”, 2022)
- In 2020, consumers made majority of their payments with debit cards, followed by credit cards and cash.
(Source: Federal Reserve Bank of Atlanta, “Consumer Payment Choice”, 2020)
Prepaid Cards
Amount Loaded onto U.S. Prepaid Cards by Year (in billions)
| Info | 2027* | 2025* | 2023* | 2022 | 2021 | 2020 | 2019 |
|---|---|---|---|---|---|---|---|
| Total (in Billions) | $1645.77 | $889.25 | $897.00 | $658.65 | $641.85 | $558.96 | $561.30 |
| Change from Prior Yr. | 85.07% | -0.86% | 36.19% | 2.62% | 14.83% | -0.42% | N/A |
*Note: Figures for 2023 and beyond are projections
- The U.S. prepaid card market is expected to reach $1,645.77 billion by 2027 (up from $658.65 billion in 2022).
(Source: GlobeNewswire, United States Prepaid Cards Market Report 2022)
- The share of prepaid debit card payments dropped to 10.5% in 2018, compared to 11.1% in 2015.
(Source: Federal Reserve Payment Study, 2019)