The Nilson Report

THE CURRENT ISSUE: Issue 1145 | Jan 2019


Today's Download: The Current Issue
FEATURED COMPANIES

Companies featured in this issue include:

Credit Card Outstandings in the U.S.

Visa Wants B2B Cross-Border Payments Company

Card Transactions Projected Worldwide

Self-Sovereign Identity Using DLT

Pine Labs Merchant Services

IATA Financial Services

Fingopay Vein ID Biometric Authentication

Ingenico ePayments in Russia

Investments & Acquisitions—December 2018

MoreFun POS Terminal

EMV Solution for Gas Pumps

JCB QR Code Payments in Asia

Citi Rewards+ Credit Card

Mastercard Streamlines Corporate Logo

U.S. General Purpose Cards, Outstandings vs. Purchase Volume

Investments & Acquisitions—December 2018

Projected Growth of Purchase Transactions Worldwide

Outstandings as a Percentage of Purchase Volume on U.S. General Purpose Cards 1990-2018

Investments & Acquisitions—December 2018

A total of 43 acquisitions, joint ventures, and investment transactions occurred in 12 countries in December 2018. The top five deals with disclosed values are listed below.

1. Earthport, United Kingdom
Visa, $252.0 mil.
2. Plaid, United States
Series C, $250.0 mil.
3. Earnin, United States
Series C, $125.0 mil.
4. Danal, South Korea
Boku, $112.0 mil.
5. Cross River Bank, United States
Venture round, $100.0 mil.

Full access to the Investments & Acquisitions—December 2018 table is available when you subscribe to The Nilson Report.

POSTED JAN 17, 2019 | PRINT

CREDIT CARD OUTSTANDINGS IN THE U.S.

Credit card debt (outstanding receivables) has been the villain in American financial services for so long it can be difficult to remain objective about it. General purpose credit card debt has rebounded from the purge that followed the Great Recession when it fell to $711.27 billion at the end of 2010. It reached $979.08 billion at the end of 2018. However, growth in recent years is partially attributable to two factors—increased consumer spending to earn rewards and more commercial card spending by U.S. businesses. All consumer and commercial card purchase volume (spending for goods and services) on credit cards creates debt. However, neither consumer spending motivated by rewards nor commercial card spending for businesses contrib-utes much to revolving credit card balances subject to finance charges.

The percentage of total credit card debt subject to finance charges, the revolving debt component of outstanding receivables, has declined almost every year over the last two decades. 

Commercial credit card spending grew from 24.4% of all general purpose credit card spending in 2007 to 29.8% in 2017. 

Credit card debt on Visa, Mastercard, American Express, and Discover cards as a per-centage of purchase volume on those credit cards peaked in 1996 at 64.7% and slipped to an all-time low of 26.5% at the end of 2018. Even in 2009, when purchase volume fell 9.3% in response to the recession, card debt fell 10.4%. Since the Great Recession of 2008, card debt has grown 13.5% while card spending has grown 90.0%. 

Card debt of $979.08 billion at year-end 2018 was only 62.6% the size of outstanding student loan debt of $1.564 trillion. 

Student loan debt is much more of a liability in the American economy because it largely encumbers younger adults. By comparison, credit card debt is spread out over the entire adult population.

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