US Payment Card Market Tops $6T

Commercial and consumer cards issued in the U.S. generated $6.13 trillion in spending for goods and services in 2018, The Nilson Report said in a press release Thursday (Sept. 5).

Commercial card spending is up 11.7 percent, compared to consumer card spending, which grew by 10.1 percent. Commercial card spending was $1.39 trillion last year. Consumer card spending was $4.74 trillion.

“Consumer card spending is higher, but every year spending generated by commercial credit and debit cards used by employees of private companies, government agencies, and nonprofit organizations accounts for a larger component of overall card spending,” said David Robertson, publisher of The Nilson Report.

Visa’s commercial card was 43.2 percent in 2018, up from 42.5 percent in 2017. Conversely, American Express and Mastercard’s commercial card market dropped. American Express dropped to 29.4 percent from 29.8 percent in 2017. Mastercard declined to 27.4 percent.

Commercial card spending accounted for 24.8 percent of all purchase volume at Mastercard in the U.S. and 16.3 percent at Visa.

Founded in 1971, The Nilson Report provides news and information about the global card and mobile payment industry. It directly surveys more than 2,000 financial institutions to produce statistics about issuers, acquirers and technology providers.

Firms are eager to seize the opportunity to move trillions of dollars that cross borders away from checks. One way to cut the paper chase is for companies to embrace commercial card products, which can speed payments and aggregate information alongside those payments, while reducing errors and eliminating security risks typically associated with ACH transactions.

But on an international stage, cross-border corporate payments can present challenges, especially when it comes to getting suppliers to adapt to digital payments. Cross-border “scheme fees” paid to the networks, as well as currency conversion and costs, eat into operating profits, as do interchange rates, which collectively are lucrative for issuers and the networks, but may make suppliers balk.