The Changing Card Business

Report Highlights

• The use of transactional cards resulted in nearly $2.6 trillion in transactions in 2000. This figure is expected to climb at an average annual growth rate (AAGR) of 8.5% to $3.9 trillion in 2005.
• Credit cards dominated transaction activity posting $1.6 trillion in business in 2000. This will grow at an AAGR of 10.4% to $2.5 trillion in 2005. Stored value card use will grow the fastest over the period, at an AAGR of 14.9%, to $56 billion in transactions in 2005.
• The credit card sector is far and away the largest accounting for 52% of the total in 2000 and keeping its dominant share as it increases at an AAGR of 6.8% to reach 1,004 million in 2005. The debit card sector is the fastest growing with an AAGR of 8.1% and is expected to reach 294 million in 2005.

INTRODUCTION

STUDY GOAL AND OBJECTIVE

The goal and objective of this study is to identify and analyze the many facets of card-based solutions, both transactional and non-transactional. The use of cards under various scenarios will be explained and quantified where possible.

REASONS FOR DOING THE STUDY

The use of cards, debit or credit, in the consumer consumption area has grown significantly in the decade of the nineties. This is true because there is an increased number of cardmembers, who in turn have an increased array of goods and services to purchase with a debit or credit card. This study will quantify those categories of goods and services where the payment vehicle is a debit or credit card. Further, the use of a card has become the device of choice for security access, ID purposes, and check- cashing and check-writing authorization, among others.

CONTRIBUTION OF THIS STUDY AND FOR WHOM

This study will explain the importance of the "card" in performing monetary as well as nonmonetary transactions. Cards used in monetary transactions include debit and credit cards issued by card issuers MasterCard International and Visa International, as well as American Express, Discover Card Services and Diners Club cards issued on a proprietary basis; prepaid cards; and smart cards. In addition, the use of a card for check-cashing and check-writing authorization purposes, as well as for access to data and facilities, for health care services, for operating a vehicle, etc. will be discussed. This study will show trending in many areas, and will indicate the importance of card-based solutions even as we go forward in the e-commerce world. The results of this study will be of value to consumers; merchants; the corporate world (especially financial services companies); state, local and federal governmental agencies; vendors and suppliers; and economists, teachers, students, consultants and investors.

SCOPE AND FORMAT

The study will present quantifiable and narrative evidence of the importance of card-based solutions from 1999 through 2005. The report is presented in modular format to give readers the full flavor of the card phenomenon.

METHODOLOGY

The methodology utilized in this study is as follows:

• Ascertain current state of the card industry
• Determine major card-based solutions, i.e., credit card, debit card, etc.
• Determine what goods and services card users will purchase
• Determine major line items/categories of goods and services to be quantified
• Quantify major line items/categories of purchases by card users
• Ascertain other uses of card-based solutions
• Quantify where possible other uses of card-based solutions

Note:  Average Annual Growth Rate (AAGR) percentages calculated through year 2005 are based upon a starting point of 2000 unless otherwise stated.

INFORMATION SOURCES

The following sources were utilized in the completion of this study:

•  
  • FDIC, Division Research and Statistics
  • The Census Bureau
  • U. S. Department of Commerce
  • Statistical Abstract of the United States
  • National Retail Federation
  • The Food Marketing Institute
  • Universal Air Travel Plan (UATP)
  • American Public Transportation Association (APTA)
  • Financial Service Center of America, Inc. (FSCA)
• Company annual reports
• Company and organization press releases
• Material from the following organizations:
• Interviews with company officials of pertinent companies and organizations