from the Philadelphia Fed
— this post authored by Susan Herbst-Murphy
The credit card industry is nothing if not dynamic. Changes in the competitive and regulatory landscape have an impact. The economic environment affects both the supply of and demand for credit. New technologies, changes to funding or other costs, and new consumer entrants alter the status quo.
Because the credit card market is continually evolving and adapting, the Payment Cards Center (PCC) frequently reviews the state of the market. One way this is done is through our workshop series. To this end, the PCC invited Frank Martien, formerly a partner at First Annapolis Consulting, Inc. (now part of Accenture), to conduct a workshop on recent developments in the U.S. credit card market. Martien currently co-leads Accenture’s commercial card and business-to-business (B2B) capabilities practice, which focuses on the issuance of consumer credit cards, small business payment cards, and commercial cards designed for corporate travel and entertainment (T&E), procurement, and fleet spending.1 This summary of Martien’s workshop is organized around those product groups as of the third quarter of 2016 and includes these highlights:
- After focusing on the low-risk segment of the market immediately post-recession, new account marketing for consumer credit cards has again become more inclusive of the near-prime and subprime strata.
- Consumer delinquencies and charge-offs have begun to rise but are well below the 10- year high.
- Small business spending on debit, credit, and charge cards increased 266 percent from 2006 to 2016. Volume on business debit more than quadrupled from 2006 to 2016, with growth rate percentages increasing to the mid-20s in 2011 before declining to single digits by 2016.
- Credit cards are equal to bank loans as the leading source of financing for small businesses, with more than one-third of surveyed small businesses reporting using either or both of these two types of loans.
- The automated clearinghouse (ACH) has been the major displacer of checks in corporate and government payments; card volume growth continues, however. Virtual card accounts, for which no plastic is issued, have gained traction, particularly for highdollar B2B transactions.
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Source
https://www.philadelphiafed.org/-/media/consumer-finance-institute/payment-cards-center/publications/discussion-papers/2018/dp18-01.pdf?la=en
