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From the December 2004 Issue of CardTrak® |
Between Thanksgiving and Christmas Day, Americans will charge nearly
$108 billion in retail purchases on general-purpose credit/charge cards,
signature debit cards, and store credit cards, about 6.2% more than
2003. This means consumers will rack up an average of $3.7 billion per
day in retail sales on payment cards, excluding groceries, gasoline, and
travel expenses, during the 29 shopping days. All together, consumers
are expected to make about $220 billion in retail purchases during
November and December, or 4.5% more than 2003
The Black Friday weekend (Nov 26-28) should bring the most activity
as retailers are expected to tally up retail sales of $11.9 billion on
VISA, MasterCard, American Express, and Discover credit cards, $2.8
billion on VISA and MasterCard debit cards, and $2.7 billion on store
credit cards.
The busiest full week is expected to be December 13-19 when
Americans should charge more than $27 billion of retail sales on payment
cards, or roughly one-fourth of the total sales anticipated during the
holiday season.
Slightly more than 65% of all retail sales on cards will be on major
credit cards while signature debit cards will account for nearly 20% of
all retail sales on cards. Approximately $16 billion in retail sales
will land on store credit cards.
Retail charges on VISA, MasterCard, Discover, and American Express
credit/charge cards should rise 6% on average, while limited purpose
store credit cards are expected to be up 4%.
Debit cards continue to capture more of holiday spending. Overall
purchase dollar volume on VISA and MasterCard signature debit cards is
growing at an annual rate of 16% as more consumers shift convenience
purchases and bill payments from cash/checks to debit cards. During the
holiday season, consumers are expected to put more than $21 billion in
retail sales onto signature debit cards, or about 9% more than the 2003
holiday season.
Gift cards are also emerging as a significant player in the payment
card market. Last year Americans used gift cards to make $3.8 billion in
purchases each month. This year that figure is expected to average $4.5
billion per month. However, gift cards are likely to be used after the
major December 25th holiday, so its impact on holiday spending between
Black Friday and Christmas Eve should be limited. However, sales of gift
cards could easily top $10 billion during the holiday season.
Credit card debt has been growing modestly over the past three
years so holiday spending may add about $6 billion to overall revolving
credit in January. Americans added $5.4 billion to revolving credit in
January 2003 and $4.5 billion in January 2002. Approximately 60% of the $86.4
billion expected to be charged to major credit cards and store credit
cards during the holiday season will likely be paid-off in full, and
without interest charges, during the January billing cycle. Therefore,
about $35 billion in retail charges on general-purpose credit cards and
store credit cards may accrue some interest next year. With interest
rates on the rise, consumers may be less inclined to revolve bigger
balances in 2005, but that remains to be seen.
2004 Holiday Retail Sales on Payment Cards
Shopping Period CARD TYPE TOTAL
Credit Debit Store ($ billions)
Nov 26-28: $11.9 $2.8 $2.7 $17.4
Nov 29-Dec 5: $14.5 $4.1 $3.2 $21.8
Dec 6-12: $16.2 $5.3 $3.7 $25.2
Dec 13-19: $17.3 $6.0 $3.9 $27.2
Dec 20-24: $10.6 $3.1 $2.4 $16.1
TOTAL: $70.5 $21.3 $15.9 $107.7
CARD NETWORKS Q3
Americans made $598.8 billion in purchases and cash advances on
VISA, MasterCard, American Express, and Discover credit and debit cards,
during the third quarter of this year. Through September 30th, consumers
charged more than $1.7 trillion on major credit cards and signature
debit cards this year. By year-end, Americans will have charged more
than $2.4 trillion on major plastic cards during 2004, compared to $2.1
trillion in 2003. Based on year-to-date figures from CardData
(www.carddata.com), VISA has a 53.6% market share with $924 billion in
volume. Second place MasterCard holds a 29.2% market share with $503
billion in gross dollar volume. Third ranked American Express has
captured 12.9% of the U.S. market this year with $221 billion in volume,
while Discover holds a 4.3% share with $73.9 billion in volume.
Here are more third quarter details on each U.S. network, followed
by a rundown on the top ten U.S. issuers:
VISA USA's online (PIN POS) debit purchase volume more than doubled
for the second consecutive quarter while off-line consumer debit
purchase volume continued a strong 16% annual growth rate. Interlink
posted $19.4 billion in consumer purchase volume for 3Q/04, a gain of
more than 134% over the year-ago quarter. VISA's consumer "Check Card"
sales volume increased 16% to $86.3 billion, compared to 3Q/03. However,
the growth rate was lower than the prior quarter's 21% increase. VISA's
consumer credit card purchase volume for the third quarter of $132.1
billion was 10.5% above last year's level. Commercial cards produced
third quarter sales volume of $30.1 billion, a 23.3% increase
year-on-year. Overall, VISA USA's sales volume for 3Q/04 was up 18.2% to
$268 billion. As of September 30th, VISA had 279 million consumer credit
cards, 151 million signature consumer debit cards, 88 million Interlink
cards, and 23 million commercial cards.
MasterCard reported that its U.S. gross dollar volume for the third
quarter increased 7.7% over 3Q/03 to $176.0 billion, compared to a 7.2%
annual growth rate for the prior quarter. The number of U.S. credit
cards grew by more than five million to 267.5 million since the second
quarter. U.S. credit card accounts also grew by more than five million
to 218 million over the past three months. MasterCard ended the third
quarter with 52.9 million off-line debit card accounts representing 58.3
million cards. Credit card volume was up 4% to $139 billion and debit
card volume increased 22% to $37 billion. Combined purchase volume for
U.S. credit and debit cards in the third quarter increased 7.7% to $133
billion, compared to one-year ago. During the quarter, MasterCard
processed 1.9 billion credit card purchase transactions and more than
550 million debit card purchase transactions in the USA.
American Express' U.S. charge volume for 3Q/04 increased 14%
year-over-year, compared to 17% for the prior quarter, 19% for the first
quarter, and a 14% for 3Q/03. AmEx says marketing, promotion, rewards,
and cardholder services expenses increased 28% over the year-ago period.
The steep rise was due to a higher redemption rate, increased cardholder
loyalty program participation, and the general increase in volume. The
issuer added 600,000 net new cardholders in the third quarter for the
U.S., compared to 400,000 in 2Q/04, and 500,000 in 3Q/03. Worldwide,
AmEx had $45.6 billion in card loans, an 8.2% increase over 3Q/03. The
U.S. segment is estimated at $38.7 billion. At the end of the third
quarter, AmEx had 38 million cardholders in the USA.
Discover posted total transaction volume for the third quarter
ending August 31st of $25.4 billion, the second highest quarterly volume
ever. While managed outstandings were down 6% for the third quarter,
transaction volume increased more than 2%, and delinquency and
charge-offs fell sharply compared to one-year ago. Merchant and
cardholder fees declined 5% to $499 million, due to lower over-limit and
late payment fees. Managed credit card loans of $47.1 billion at quarter
end were up slightly from the prior quarter but down 5.8%
year-over-year. The account base contracted during the third quarter by
0.6% year-over-year, but was flat sequentially at 46 million.
The Top 10 issuers now control slightly more than 85% of the total
U.S. general-purpose credit card market. During the third quarter, bank
credit card outstandings rose to $688.3 billion. The merger of Chase and
Bank One has produced a market leader with more than 19% of the market.
However, the partnership between American Express and MBNA translates
into two issuers with a combined market share of more than 21% of the
U.S. market. The top five issuers now represent 64.5% of the market. The
top ten currently have a collective market share of 85.2%, based on
outstandings. At the end of the third quarter, VISA had $289.6 billion
in credit card outstandings while MasterCard had $287.7 billion.
TOP TEN U.S. BANK CREDIT CARD ISSUERS - 3Q/04
(VISA, MasterCard, Discover, American Express)
[$ billions]
Rank/Issuer Outstandings Market Share
1. JPM Chase $131.5 19.1%
2. Citigroup 112.0 16.3%
3. MBNA 81.5 11.8%
4. Amer. Exp.* 63.9 9.3%
5. Bank of Amer. 55.4 8.0%
6. Discover** 47.1 7.2%
7. Capital One 46.1 6.8%
8. HSBC 20.1 2.9%
9. Providian 17.9 2.6%
10.Wells Fargo 8.2 1.2%
TOTAL $583.7 85.2%
* includes $25.2 billion in non-revolving outstandings
** as of 8/31/04
Source: CardWeb.com(R) CardData(R)
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