Consumer Payment Card News

VISA Unplugged

VISA revealed for the first time how far it has come in the business card market yesterday. VISA reported its corporate customer base rose 36.3% last year to 4.3 million accounts. Cardholders of ‘VISA Corporate’, ‘VISA Business’ and ‘VISA Purchasing’ cards accounted for $21.9 billion in volume compared to $15.2 billion for 1996. Business card transactions for 1997 hit 128.7 million compared to 98.8 million for 1996. In a private on- the-record interview with RAM Research president Robertmckinley last June in Maui, Carl Pascarella, VISA USA president, said he had no idea how well VISA’s business card market was doing but said data would be forthcoming. One year later the business card figures are impressive, clearly rivaling American Express’ stronghold on the corporate card market. In September 1993 Pascarella told McKinley, two days after he returned from Japan and assumed the U.S. leadership of VISA USA, he would lead the charge to develop the business card market in America. Clearly he has delivered on the promise.

VISA also reported yesterday its share of PCE (personal consumption expenditure) increased last year to 9.6% compared to 8.7% for 1996. VISA also claimed its overall market share increased to 52.3%, based on data compiled by CA-based HSN Consultants Inc.

FULL STORY:
Visa U.S.A. reported Thursday its sixth consecutive year-to-year increase in market share, with a 52.3 percent share of the credit and debit card market for the year ended December 31, 1997, compared with 51.4 percent the year before. For the third consecutive year, Visa was the only general purpose payment card brand to report total volume market share growth.

According to CA-based HSN Consultants Inc. Visa’s market share grew nearly one full percentage point, at the expense of all competing brands.

Visa’s 1997 volume surpassed the one half-trillion dollar mark, increasing 17.2 percent to $525.4 billion from $447.4 billion in 1996 — a gain that signifies an additional $78 billion in expenditures shifting to the Visa brand. The number of Visa cards in circulation in the United States at the end of 1997 grew by 9.2 percent to 298.7 million cards (credit and debit), from 273.6 million cards in 1996. Today, Visa has 33 million more cards in the market than all its competitors combined, Those cards were used 6.6 billion times during 1997, a 20.9 percent increase over 1996’s total transaction volume of 5.4 billion.

“Visa’s leadership position is the direct result of the strategic direction and continued support of our valued partners — our Member financial institutions Success comes directly from an unyielding focus on our strategic objectives: to work with our members to create and deliver innovative products that satisfy cardholders’ needs; to effectively leverage technology; to provide convenient alternatives to cash and checks open and to expand -now Visa acceptance markets,” said Carl F. Pascarella, president and chief executive officer of Visa U.S.A. “This focus allows us to continually identify new opportunities to help our Members grow their business and meet the needs of existing and new customers. Consumers want choice and Visa, working with its members, offers a complete line of payment options to meet those needs.”

Mr. Pascarella also said that in 1997 Visa increased its share of personal consumption expenditures (PCE) to 9.6 percent of total U.S. spending of $5.5 trillion. This is up from 8.7 percent in 1996.

Visa Check Card – Convenient Alternative to Cash and Checks Visa’s PCE growth was fueled, in large part, by consumers’ overwhelming use of the Visa check card which has experienced double digit percentage growth since the product was re-launched in 1993. Furthermore, the number of Member financial institutions issuing the Visa check card rose to 5,541 in 1997 from 4,035 in 1996, a 37.8 percent increase.

At year-end, there were 58 million Visa check cards in circulation, an increase of 27.4 percent from the 45.6 million in the market in 1996. Similarly, transactions jumped by an overwhelming 66 percent in 1997, soaring to more than two billion. Dollar volume rose to $93.6 billion, resenting an increase of 72 percent from $54.4 billion in 1996.

The Commercial Card Market

1997 was a marquee year for Visa in the commercial card arena. By undertaking a number of strategies to penetrate this burgeoning market, Visa’s commercial card accounts surged to 4.3 million, a rise of 36.3 percent since 1996. Cardholders used their Visa Corporate, Visa Business and Visa Purchasing Cards to transact $21.9 billion in volume, an increase of 44.6 percent over the $15.2 billion transacted in 1996. Keeping pace with this trend, the number of transactions on Visa’s suite of commercial products rose 30.2 percent to 128.7 million, up from 98.8 million.

“Visa sees enormous potential in the largely untapped commercial card market and we have stepped up efforts to enhance our suite of commercial products and reach this important audience,” said Pascarella. “These efforts paid off in 1997, as corporate America increased its reliance on Visa commercial products by nearly 50 percent.”

New Acceptance Markets Increase Consumer Convenience

Market development efforts are key contributors to Visa’s success in moving shares of consumer payments away from cash and checks and onto Visa. In 1997, Visa enjoyed double-digit growth in every merchant category — in both established and emerging acceptance markets.

In established merchant categories Visa cardholders spent $83.5 billion in Travel and Entertainment (T&E), up 16 percent from a year earlier, $186.9 billion in Retail, up 15 percent; and $36.5 billion in Mail and Phone Order, up 19 percent. In each of these categories Visa experienced a growth rate nearly three times that of the individual industry’s growth.

In emerging markets Visa experienced explosive growth last year, with cardholders spending $9.6 billion in Healthcare, up 16 percent from 1995; $7.8 billion in Government payments, up 21 percent; and $9.3 billion in Recurring Payments (i.e., dues memberships and subscriptions).

Visa’s success in 1997 was amplified by the inroads made in combating credit card fraud which fell to a record low of .08 percent (or eight cents out of every $100). What’s more, significant progress was made in the area of personal bankruptcy with the achievement of bipartisan support for legislative reform, and a significant increase in consumer education surrounding responsible use of credit.

“There continues to be tremendous opportunity in the U.S. market for growth of payment card products,” continued Pascarella. “In the face of an extremely challenging marketplace, our focus will continue to be on leveraging the strength of the Visa brand and payment system to the benefit of our Members so they can continue to compete and differentiate their services to meet the needs of their cardholders.”

Visa is the largest consumer payment system worldwide. It plays a pivotal role in advancing new payment products and technologies to benefit its 21,000 member financial institutions, their cardholders, and the global economy. Visa is the only consumer payment system to facilitate $1 trillion worth of purchases of goods and services in a fiscal year. Visa’s 600 million cards are accepted at more than 14 million worldwide locations, including more than 400,000 ATMs in the Visa/PLUS Global ATM Network. Visa’s Internet address is http://www.visa.com.

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