American Credit Card Processing Decline in 2010

American credit card processing was the only electronic payment method to show a decline in use from 2006 to 2009 (-0.2% per year on average). There were 21.6 billion transactions in 2009, 151 million less than in 2006. By volume, credit card payments amounted to $1.9 trillion in 2009, down from $2.1 trillion in 2006. This decline in credit card use may be a result of the economic recession and may not necessarily represent permanent changes in the payment behavior of U.S. consumers and businesses. As a reference, the rate of seasonally adjusted consumer credit card debt in the U.S. rose in every month from January 2006 to its highest point in August 2008 before falling in each following month through September 2010.

Debit card payments, on the other hand, built on their double-digit growth from 2006 to 2009 and made up 34.8% of all non-cash payments in 2009 (2.0% by volume). Total debit card transactions rose 14.8% per year for the period. PIN debit payments, facilitated by American credit card processing companies, rose more quickly (15.6% per year) than signature-based debit payments (14.3% per year). The absolute rise in signature debit payments from 2006 to 2009 (7.7 billion) was greater than the total increase in PIN debit payments (5.1 billion).

The average signature debit amount per transaction fell from 2006 to 2009 from $40 per item to $37. The average value of PIN debit card transaction rose for the period, from $37 to $39 per transaction. Interestingly, the average amount of signature-based payments fell below the average amount of PIN payments, partly reflecting the increase in the use of the signature-based in small-ticket card payments.

Even though they still make up a relatively small volume among the various types of non-cash payments facilitated by American credit card processing companies, the use of prepaid card is the quickest growing one. The number of prepaid card payments rose by 21.5% per year from 2006 to 2009, and the volume of prepaid transactions rose at 22.9% per year. Private label (also known as store cards) was the most used kind of prepaid card, with 2.7 billion transactions counted in 2009. Two billion transactions were made on Electronic Benefits Transfer (EBT) cards, and 1.3 billion were processed through general purpose prepaid cards.

Prepaid debit transactions include payments by cards funded by U.S. firms or government agencies, such as payroll cards and EBT, but exclude single-use and reloadable cards, transit cards, toll systems, and phone cards.