Credit Card Industry Trends and Analysis 2022
Every time consumers tap or swipe their credit card, payment data is sent through a complex web of actors - including card networks, issuers, and gateways - that help complete the transaction. Credit card processors are responsible for the careful and secure transmission of this data.
Credit Card Rewards
Three of the top four factors cited when choosing a credit card were related to rewards.
Front-End-Processors: they ensure that the customer's balance is sufficient for a transaction by routing transactions from merchants to the cardholder's bank for authorization.
Back-End-Processors: Take settlements from front-end processors and forward the assets to the dealer's responsible bank.
Credit Card Market Statistics: Size & Growth
Credit cards are an integral part of the U.S. payments system, and their importance has continued to grow in recent years. Credit cards accounted for an average of 23.6% of all U.S. consumer transactions in 2019, a slight increase over 2018, and this usage is reflected in volume: according to The Nilsson Report, the four major networks reached nearly $4 trillion in volume in 2019, up 8.7% from the previous year. And the ongoing rewards race - which sweetened the deal for both existing borrowers and new applicants - as well as new products that could reach customers previously averse to credit, combined with less stringent lending guidelines, also boosted usage.
Despite the aforementioned overall increase in card spending, credit cards are likely to take a hit from customers looking to limit their debt in light of the ongoing pandemic: MasterCard, for example, reported a 12% decline in loan volume in the U.S. in Q3 2020 versus 4% growth in credit and debit cards in the U.S., which is in line with the results of the major issuers. In addition, customers have less incentive to spend with credit cards. Rewards still give customers some incentive to spend on credit as their importance as a savings tool has increased this year.
Trends In The Credit Card Industry
Looking forward, two clear patterns will create in the Visa business: Rewards and Mobile Payment Technology.
Credit card companies will continue to play an important role in the payment system. Francois Nell/Getty Images
Seventy-five percent of consumers have a rewards program associated with their preferred credit card. According to a survey by Insider Intelligence, three of the top four factors cited when choosing a credit card were related to rewards. Particularly among respondents from the millennial generation, all three top features were related to rewards.
Insider Intelligence highlights three rewards trends we can expect to see in the coming years:
• Flexible rewards (the ability of consumers to choose what types of rewards they receive).
• Bonus rewards for e-commerce
• Bonus rewards for local purchases
• In addition, the rise of mobile payments and the successful launch of the Apple Card will massively change the way consumers use credit cards.
Apple Card Credit Card
The successful launch of the Apple Card will massively change the way consumers use credit cards. Apple Following the launch of Apple Card in 2019, Apple CEO Tim Cook announced that more than doubled transaction volume and revenue on an annualized basis. He contrasted Apple Pay's volume development with PayPal’s, taking note that Apple Pay is growing multiple times quicker.
Much of the success of the Apple Card is due to the cashback offer: Users receive 2% cashback on all purchases made through the mobile wallet and 3% cashback on Apple Pay transactions at select merchants. Furthermore, Apple Card's initial achievement will probably speed up shopper interest for more computerized and portable installment arrangements.
The rise of Generation Z and Millennial is forcing merchants to adopt mobile point-of-sale (mPOS) solutions that accept mobile wallets, contactless payments, and other digital products that catch the eye of these younger, tech-savvy generations. For example, more than half of Generation Z uses digital wallets for purchases at least once a month, and about 75% use a digital payment app.
And as the spending power of this cohort continues to grow, Insider Intelligence projects that there will be 16.6 million mPOS terminals in the U.S. by 2024 and that in-shop mobile payments will grow at a compound annual growth rate (CAGR) of 23.9% to $262.6 billion by 2024. From mobile wallets to retail apps, younger consumers want to make their purchases as efficiently and conveniently as possible, and payment processing companies are responding to this demand.
Insider Intelligence recently reported that Fiserv, Samsung, and Visa have jointly developed an mPOS solution that successfully accepts a PIN-based contactless transaction on a mobile device. The arrangement empowers shippers to acknowledge contactless exchanges on a cell phone without extra equipment.
Major Card Processing Companies
TSYS, or Total System Services, is the third-largest payment processor in the U.S. credit card issuer market. It provides services to more than 3.5 million small and medium-sized businesses (SMBs) and more than 1,300 financial institutions (FIs) in over 100 countries. In 2019, the processing company was acquired by Global Payments for $21.5 billion. The two companies expect annual cost synergies of at least $300 million.
Fiserv First Data Growth
Fiserv provides payments, risk, and compliance services to financial institutions in more than 100 countries. In 2019, Fiserv procured First Data for $22 billion, and the joined organization expects $500 million in income cooperative energies for more than five years.
Elavon is the fourth largest merchant acquirer in Europe - and the seventh-largest in the US. The payment solutions provider is a subsidiary of US Bancorp and offers features such as online and in-shop payment processing. In 2019, Elavon acquired payment gateway Sage Pay to increase its market share in the UK and Ireland. This is just a sample of the list of the world's leading card processing companies. Insider Intelligence has gathered a more nitty-gritty rundown of the top Visa processors in 2021.
Examinations And Reports On The Charge Card Industry
Notwithstanding charge card handling, Insider Intelligence distributes an abundance of exploration reports, graphs, conjectures, and examinations on the installments and trade industry. Get familiar with how to get to all of this substance here.
And here are some related Payments & Commerce reports that might interest you
Bank of America says U.S. stocks will simply stay afloat one year from now and European stocks will fall. Bank of America encourages financial backers to purchase to try not to baffle returns in 2022.
• Payments Ecosystem, which examines the payments ecosystem today, its growth drivers, and how the industry will evolve in the future.
• The Online Grocery Report, which examines how online grocery shopping evolved before the coronavirus pandemic to understand the state of the industry before the shopping method became vital to many consumers.
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