The Future of Consumer Card Payments

November 3, 2006


San Francisco, CA, USA November 3, 2006

Celent examines trends and outcomes in the credit, debit, and prepaid industries.

Payment cards have come a long way since they emerged in the 1950s. Credit cards are no longer an exclusive product for the elite, but a commodity for the average American. Debit cards have evolved from a means to withdraw money at an ATM to a device used to make daily purchases at a nearby merchant location; and prepaid cards continue to modernize many inefficient paper-based systems.

In a new report by Ariana-Michele Moore, , Celent details the evolution of these devices and how they have impacted the US payments economy. Not only have they provided a convenient and easier way for consumers to spend money, they have also helped shift US consumers from a paper-based economy to an electronic one. Today, consumers spend just as much with card as they do with paper, and the use of paper continues to decline.

"Concurrent with the increase in card use has been the shift in consumer purchasing behavior. Cards are being used for more than luxury and emergency purchases. They are increasingly capturing the many buckets of consumers payments," says Alenka Grealish, manager of the Banking group at Celent. Such purchases include emergency items, luxury goods and other large ticket items, gifts, utilities, groceries, and everyday expenditures. In addition, they are not only being used at merchants but also to pay bills, donate money, receive pay checks, and send money.

This report provides a look at the future of cards, as well as an overview of the challenges issuers will face and thoughts on strategies to overcome those challenges.

The 40-page report contains 14 figures and three tables. A table of contents is available online.


Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
Tel: +1 212 345 1366

Europe (London)
Chris Williams
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
Tel.: +81 3 3500 3023

Table of Contents

San Francisco, CA, USA November 3, 2006

Executive Summary 3
Introduction 5
  Credit Card Trends 7
  Debit Trends 9
  Prepaid Trends 13
Challenges to Market Growth 16
  Merchant Retaliation 16
  Interchange 18
  Competitive Issuing Environment 19
The Opportunity for Cards 24
  Quantifying the Opportunity 24
  Capturing the Opportunity 25
Competitive Strategies and Trends 29
  Revisiting Old Strategies 29
  Understanding the Shifts in Consumer Lifestyles 31
  Providing a Distinctive Customer Experience 33
  Providing a Distinctive Product 35
Conclusion 37
Objectivity and Methodology 39

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