Americans continue to fall in love with their debit cards, steadily taking more of the cards and using them for an increasing volume of purchases, even for the “small change” items which cash used to dominate. According to Callahan and Associates, Americans charged $13.5 billion in transactions under $5 in 2004 and a MasterCard survey found that debit cardholders use their debit cards for larger amounts over half the time. The survey found that cardholders used their debit cards for 29% of transactions under $20, 55% of transactions between $20 and $50 and 52% of transactions between $50 and $100. There are also indications that while the use of signature and personal identification numbers are still competing, there may very well be room for both in the card industry. Transactions validated by PINs grew 26% while the dollar volume increased 33% in 2004 while transactions validated by signature grew 18% and the dollar volume rose 19%. By far more merchants, 1.7 million, in the U.S. accepted transactions using PINs while only 500,000 accepted Visa/MC signature transactions. These realities continue to fuel the debate within credit unions about whether or not to offer some sort of rewards program on their cards. On the plus side, adding a rewards program drives up card usage and volume, but on the negative side can cut into debit card profitability.

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