About Stored Value Cards
Stored value cards are one of the most dynamic and fastest growing products in the financial industry. According to industry estimates, more than 2,000 stored value programs are available, with roughly 7 million Visa- or MasterCard-branded stored value cards in the marketplace. There are approximately 20 million users and that figure is expected to more than double to 49 million users by 2008. In 2003, stored value cards were used to make $42 billion in transactions. By 2006 over $72 billion in stored value transactions are expected. Experts put this industry in the introductory or early growth stage of the product life cycle, suggesting that there is substantial growth potential in the years ahead.
Federal Reserve Bank of New York
Tax Refunds
Stored value cards can deliver the speed of an deposit refund, of 8 to 15 days, for taxpayers without a bank account. However, consumers using stored value cards instead of RALs need to know their tax refund monies will be protected in case of error or theft.
Federal Reserve Board
Debit Card Transactions
Among electronic payments, debit card transactions
grew the most in terms of number, from 8.3 billion in
2000 to 15.6 billion in 2003. The growth in debit card
payments accounted for more than half the growth in
electronic payments over the period.
Debit cards are used primarily by consumers for
everyday purchases at retail stores. Credit cards and
checks are also used for this purpose, but, with an
average value in 2003 of $40, debit card payments
were used for small-value payments more commonly
than other payment instruments except electronic
benefits transfers and, perhaps, cash.
Most debit cards can be used not only to make
payments, but also to access an ATM network by
entering a personal identification number (PIN).
Depending on the arrangements made by the depository
institution that issues the card, payments by
debit card may be routed through one or more networks.
Payments authorized with a PIN may flow through regional or national debit card networks.
Some debit cards may also be used to make
signature-based payments (including remote payments
that the cardholder authorizes over the Internet
or telephone). Almost all such payments are routed
through networks operated by VISA or MasterCard.
Such cards, therefore, may be used in the same way
as credit cards. They have different financial characteristics,
however, as they are linked to a transaction
(deposit) account rather than a credit account.
The number of signature-based debit card payments
almost doubled between 2000 and 2003, from
5.3 billion to 10.3 billion for an annual growth rate
of almost 25 percent. This growth accounted for most
of the increase in debit card payments. The average
value of a signature-based debit payment increased
from $40 in 2000 to $42 in 2003.
The number of debit card payments authorized
by a PIN increased from 3.0 billion in 2000 to
5.3 billion in 2003, an annual growth rate of 21 percent.
Although PIN-based debit card payments had
a higher growth rate than both ACH and credit card
payments, they started from a smaller base. PINbased
payments grew more slowly than signaturebased
payments, accounting for less than one-third
of the growth in debit card payments from 2000 to
2003. The average value of PIN-based debit card
payments declined from $46 in 2000 ($49 in 2003
dollars) to $38 in 2003.
Federal Reserve Board
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