Payment Volumes For U.S. Credit Card Industry Could Cross $1 Trillion In Q4

by Trefis Team
American Express Company
Rate   |   votes   |   Share

The U.S. credit card processing industry resumed its growth trajectory after a seasonally slow first quarter to reach a record $927 billion in purchase volume over Q2 2018. This represents an almost 10% jump from the figure of $844 billion in Q2 2017 and $846 billion in Q1 2018. Given that the U.S. credit card purchase volume was $902 billion in Q4 2017, a year-on-year increase of 10.8% would nudge it past the $1-trillion mark in Q4 2018.

Visa remains the undisputed market leader with a market share of over 53% – a figure that should continue to increase, as the company’s credit card payment volumes are growing at a faster rate than the industry. However, a shakeup in the rankings among the four incumbents is also in the cards for the first time in decades, as American Express is closing in on MasterCard’s #2 spot. This is primarily because of American Express’s new growth strategy. Our detailed interactive dashboard captures how Amex shareholders will benefit from its new growth strategy over coming years.

The payments industry is seasonal, with purchase volumes peaking in the fourth quarter of the year due to the impact of holiday season shopping, before falling sharply in the first quarter. The figure then generally increases steadily over the second and third quarters. This trend is seen clearly in the table below, which captures the changes in credit card purchase volumes for these companies over the last five quarters.

Visa’s dominance in the industry is also evident from the table above, as the company continues to process more credit card payments than its three rivals combined. While MasterCard and Discover have not been able to match Visa’s higher growth rate (which regularly exceeds 10% year-on-year), American Express has reported a growth rate of 10% for each of the last two quarters. This has helped the company nearly close the gap with rival MasterCard.

American Express’ growth over recent years stands out in particular, as the company had a major setback from its loss of the lucrative Costco card partnership in 2016 – an event that had a notable impact on the company’s card balances as well as purchase volumes. The company has done extremely well to return to growth by regaining lost ground in its core affluent segment of cardholders, and through its recent efforts to grow its merchant base. AmEx’s work to attract more merchants on its payment platform by slashing fees has boosted card usage among its cardholders, which in turn has driven purchase volumes higher. Given the company’s new strategic push, we project it to become the second largest credit card processor in the U.S. by early next year.

Details about how changes to U.S. Card Transaction Volumes affect the share price of these companies can be found in our interactive model for Visa | MasterCard | American Express | Discover

What’s behind Trefis? See How it’s Powering New Collaboration and What-Ifs
For CFOs and Finance Teams | Product, R&D, and Marketing Teams
More Trefis Research
Like our charts? Explore example interactive dashboards and create your own

Rate   |   votes   |   Share


Name (Required)
Email (Required, but never displayed)
Be the first to comment!