Purchase volume across all payment cards in the U.S. is expected to exceed pre-pandemic levels by more than one-third in 2024 — and this is likely welcome news for companies who currently offer card programs or who intend to offer them in the future.
A recent Nilson Report, one of the most respected card and payments sector publications, forecasted the purchase volume of consumer and commercial credit, debit, and prepaid general purpose and private label cards to reach $10.718 trillion in 2024.
In the near term, however, prospects for growth remain uncertain. “In a fast-changing environment, accurate forecasting remains difficult,” Vasant Prabhu, Visa’s vice chairman and chief financial officer said on an earnings call on January 28. “The trajectory of domestic spending varies across the globe. Some regions and countries are recovering fast, others are holding steady, while some have slowed in recent weeks as a result of new restrictions.”
Payment card purchase volume tilts toward debit cards
The Nilson Report’s forecast, published in the October issue, of $10.718 trillion of payment volume in 2024 compares to $7.897 trillion in U.S. purchase volume in 2019. (U.S. purchase volume in 2019 made up roughly 40% of all payment card volume in 2019, per Visa’s recent annual report.)
Looking back on 2019, U.S. payment card purchase volume was tilted toward credit cards, but that is expected to reverse over the next three years. In 2019, purchase volume on credit cards made up 53.62% of the total U.S. purchase volume. By 2024, debit cards are forecast to make up 54.25% of the total purchase volume.
A greater preference for debit cards was observed on the Visa network during the recent quarter, Prabhu said. “In the U.S., we are actually back to our pre-pandemic growth trajectory with debit significantly ahead, offsetting credit underperformance.”
Debit cards have been growing in popularity for some time now. The increase in debit card usage compared to credit card usage echoes responses that U.S. consumers gave in the fourth annual Report on the Economic Well-Being of U.S. Households in 2016. When asked how they would make a $10 purchase at a local store, 37.1% said debit card, 36.8% said cash, and 24.3% said credit card. The preference for debit cards over credit cards was even higher among the unbanked and underbanked.
The survey also revealed that many people who pay with credit cards avoid paying interest. When asked whether they carried a balance on their credit card, which would have triggered interest charges, 45% said they always pay their bill in full.
While conclusions are premature, these two trends: overall payment card growth and prudent consumer use of credit support the view that the payments industry and global economy will return to health stronger than ever as vaccines are distributed and business activity picks up.