Reflecting consumer preference for choice in payment alternatives and a continuing shift to card-based payments, Visa International announced that, for the first time, its global debit card volume has surpassed its credit card volume.
The company reported that global Visa debit card volume reached US$1.48 trillion at the end of 2003, an increase of 17 percent over the previous year. At the same time global Visa credit volume increased five percent from the previous year to US$1.45 trillion.
The growth of Visa payment cards and services, which are offered through 21,000 member banks, contrasts with a decline in paper-based forms of payment. Research agency Global Insight estimates that, globally, cash and check payments have decreased by four and seven percent respectively over the past four years as a percentage of total personal consumption expenditure (PCE). Use of Visa debit products alone has increased by 90 per cent over the same period.
“Cardholders are increasingly looking for the most efficient, responsible means of purchasing,” said Gaylon Howe, executive vice president, Consumer Product Platforms, Visa International. “Consumers have choice — pay now, pay later or, as with the increasing number of prepaid products, pay before. It means cardholders can manage their finances by paying for purchases in a way that best suits the situation and their personal needs.”
While Visa’s credit cards continue to thrive, the convenience and security of payment cards over cash and checks have also encouraged consumer debit usage. In addition to everyday purchases, such as groceries, petrol, and dining, consumers are increasingly using their Visa debit cards for purchases on the Internet and recurring payments, such as monthly bills and membership fees. For financial institutions, debit cards provide a more efficient mechanism for customers to access funds in their accounts, increasing customer loyalty and retention.
“Debit has turned out to be a strong platform to develop a whole range of innovative payment products,” said Mr. Howe. In addition to the classic Visa debit card, other new debit-related products include Visa salary cards and Visa benefits cards.
The success of debit cards globally has also helped many financial institutions grow their business beyond more traditional credit card products. Offering Visa debit often helps to reach consumers who would not normally qualify for a credit card or can strengthen a customer’s existing relationship with their bank. For merchants, accepting debit cards results in guaranteed payment and leads to increased sales and lower cash handling costs.
“Not only do debit card sales help the greater economy, they play an integral role in Visa International’s success — one that will only continue to grow in the upcoming years,” said Mr. Howe. “At this point, we look forward to providing further card and product innovations that will offer additional new choices in the way people pay.”
Plastic payments took off in the U.S. with the introduction of credit and charge cards in the 1950s. Debit cards were first introduced in France in the 1960s and grew in popularity across most of Europe. In the U.S., debit cards were introduced in the mid 1970s. Last year, Visa debit card transactions surpassed Visa credit card transactions in the U.S., although credit still accounts for a majority of sales volume.
About Visa International
Visa is the world’s leading payment brand generating nearly US$3 trillion in annual card sales volume. Visa has unsurpassed acceptance in more than 150 countries. The Visa organization plays a pivotal role in developing innovative payment products and technologies to benefit its 21,000 member financial institutions and their cardholders. Visa is a leader in Internet based payments and is pioneering the creation of u-commerce, or universal commerce — the ability to conduct commerce anywhere, anytime, and any way. For more information, visit www.corporate.visa.com.