U.S. debit card-issuing financial institutions experienced debit card transaction growth of 18 percent in 2006 and expect continued strong growth in 2007, according to a new study commissioned by PULSE EFT Association.Debit card usage continued to grow at a healthy pace in 2006. Issuers reported average transaction growth of 20.3 percent for signature debit and 15.7 percent for PIN debit last year, with large banks experiencing the highest growth rates. Debit card activation rates averaged 56 percent in 2006 for issuers that define "active" cards as those that have made one signature-based transaction in the last 30 days. On average, active cardholders performed 16.1 transactions per month - 10.6 signature-based and 5.5 PIN-based. Study participants achieved an average debit card penetration rate of 72 percent for consumer checking accounts, and 86 percent of the debit cards they issued were signature-capable. "The financial institutions that participated in our study reported a solid year for debit in 2006 and are optimistic about the future of this payment method," said PULSE Executive Vice President Cindy Ballard. "The 2007 Debit Issuer Study is a comprehensive analysis of the U.S. debit card industry, providing insights into such varied areas as transaction activity, fees and fraud losses." A total of 55 debit card-issuing financial institutions participated in the study. These large banks, community banks and credit unions collectively issue more than 62 million debit cards. Other findings regarding debit program performance included: • Business debit cards are offered by 64 percent of the issuers surveyed and account for 5 percent of their total card base. (All of the large banks in the study offer business debit cards.) • More participating institutions offered debit card rewards in 2006 (37 percent, compared to 36 percent in 2005). Of those participants that offer debit rewards, 37 percent reward cardholders for both PIN and signature transactions, compared to 29 percent in 2005. • Four percent of the issuers surveyed issued contactless cards in 2006. An additional 22 percent plan to do so in 2007, and 29 percent are considering it. "Contactless cards are a hot topic in the industry, but most issuers are taking a 'wait and see' approach," said Tony Hayes, vice president with Dove Consulting and project lead on the study. "Reasons for their hesitation include lack of widespread merchant acceptance, high levels of uncertainty about the future of the product and fraud-related concerns." The PULSE 2007 Debit Issuer Study, conducted by Dove Consulting, a division of Hitachi Consulting, is an update of a study PULSE released in December 2005. It offers more recent data on debit card program performance and fraud losses, and provides informative new insights on topics such as debit interchange and debit rewards.