November 3, 2009
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News: Take Stock in Debit Cards
In the wake of the recession, it has become apparent that Americans have curbed credit card spending and in increasing numbers is switching to cash or debit. Many individuals including myself have speculated for some time that as a result, lenders and credit card processors would be forced to find alternative methods to produce earnings. According to new research by Goldman Sachs & Co., lenders will profit from debit card payments as electronic payment processing transactions are expected to increase to more than 42 percent of the transactions worldwide by 2012. Furthermore, the research also indicates that electronic payment processors will experience significant growth with the new mobile phone prepaid cards and debit and credit card processing systems currently embracing the market.
Goldman Sachs also believes that the current credit crunch and new card reform legislation will hamper the electronic payment processing market for a while yet. The banking investment firm predicts that credit card volume will drop to $1.225 trillion in 2009 down 11 percent from $1.372 trillion in 2008. Furthermore, they expect it to continue dropping to an estimated $1.211 trillion in 2010. Goldman did not have the same gloom and doom associated with debit cards and predicts the U.S. debit card volume will increase by 5.4 percent to over $1.187 trillion in 2009 and 8.2 percent to $1,284 trillion in 2010, surpassing the credit card volume.
Lenders and card issuers will not be the only entities to benefit from the increase in debit card spending, the two largest credit card networks in the world, Visa and MasterCard, will most likely be the big winners. Both companies are strategically placed in the market with the capabilities of providing the resources that will be required to handle the influx of debit card and mobile payment processing. The Goldman report also indicated that a global E-commerce volume is expected to grow from $736 billion in 2009 to more than $1 trillion in 2012. The prepaid card market is also expected to grow from $279 billion to $335 billion and the mobile phone payment processing market is expected to explode from $26 billion to $135 billion.
In the wake of the recession, it has become apparent that Americans have curbed credit card spending and in increasing numbers is switching to cash or debit. Many individuals including myself have speculated for some time that as a result, lenders and credit card processors would be forced to find alternative methods to produce earnings. According to new research by Goldman Sachs & Co., lenders will profit from debit card payments as electronic payment processing transactions are expected to increase to more than 42 percent of the transactions worldwide by 2012. Furthermore, the research also indicates that electronic payment processors will experience significant growth with the new mobile phone prepaid cards and debit and credit card processing systems currently embracing the market.
Goldman Sachs also believes that the current credit crunch and new card reform legislation will hamper the electronic payment processing market for a while yet. The banking investment firm predicts that credit card volume will drop to $1.225 trillion in 2009 down 11 percent from $1.372 trillion in 2008. Furthermore, they expect it to continue dropping to an estimated $1.211 trillion in 2010. Goldman did not have the same gloom and doom associated with debit cards and predicts the U.S. debit card volume will increase by 5.4 percent to over $1.187 trillion in 2009 and 8.2 percent to $1,284 trillion in 2010, surpassing the credit card volume.
Lenders and card issuers will not be the only entities to benefit from the increase in debit card spending, the two largest credit card networks in the world, Visa and MasterCard, will most likely be the big winners. Both companies are strategically placed in the market with the capabilities of providing the resources that will be required to handle the influx of debit card and mobile payment processing. The Goldman report also indicated that a global E-commerce volume is expected to grow from $736 billion in 2009 to more than $1 trillion in 2012. The prepaid card market is also expected to grow from $279 billion to $335 billion and the mobile phone payment processing market is expected to explode from $26 billion to $135 billion.