Debit use is growing at a faster rate than credit. According to Mastercard, debit transactions grew 11.2 percent last year, with credit transactions at 7.4 percent. And programs that relied on competitive differentiation are losing ground as other card programs take mind and wallet share. Debit users skew younger, ultimately replacing older credit card users who represent the bulk of current credit users. And, 42 percent of in-person purchases are made with debit, versus 28 percent for credit cards.
But this isn’t a credit vs debit debate, it’s a “yes… and” scenario. Card users want the option to select the payment method of choice, credit, debit, pay-by-bank or other alternatives. When choosing who to buy from, a whopping 70 percent of consumers consider the availability of their preferred payment method either “very” or “extremely” influential.
So there’s plenty of room for both credit and debit at the consumer table. Each serves different purchase patterns, and gives consumers what they want most: Choice.
The reality is, many consumers either don’t qualify, or simply don’t want another credit card. These consumers can easily be overlooked when rejected by a brand’s third-party bank, although they may be loyal customers of the offering brand. And the credit averse may never apply, quietly using other debit cards for purchases, racking up loyalty points and rewards for another (competitive?) company.
One final stat: Fifty three percent of applicants will accept a second-look debit offer when initially rejected for a credit card. This captive audience has expressed interest in the company’s card, and are ripe for an alternative.
It’s not credit vs. debit, it’s both
Treating debit and credit as competing products misses the point. They solve different problems, appear at different moments in the customer lifecycle, and unlock different economic levers for the business. Credit remains powerful for financing, larger discretionary purchases, and premium loyalty tiers. Debit, meanwhile, is increasingly how customers transact day to day — faster, more frequently, and with fewer barriers to entry.
Debit expands participation. It reaches customers who don’t qualify for credit, don’t want it, or simply prefer to spend from available funds. That broader eligibility translates into higher transaction frequency and more consistent engagement. Where credit programs tend to concentrate value among top spenders, debit programs distribute engagement across a wider base — capturing incremental volume that credit alone will never reach.
Debit’s super power: Holding consumer funds
Despite lower interchange, debit has a distinct advantage: Debit allows enterprises to hold funds, preload value, and engage customers before a purchase occurs. Stored balances, direct deposits, pay-by-bank loads, and instant payouts all change the timing of cash flow and the economics of engagement. Funds can generate yield while they sit, rewards can be funded more efficiently, and payments can move with fewer intermediaries and lower costs.
The most effective programs don’t choose between credit and debit — they design for both. Credit continues to drive premium value and long-term loyalty, while debit increases reach, frequency, and financial flexibility. Together, they create a more inclusive, more durable payments portfolio that reflects how customers actually spend, save, and move money today.
