CardTrak - Tracking Payment Payment Cards for the U.S. Consumer Since 1986

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)