Market Overview

Analyst: Credit Card Volume Remains Strong

Analyst: Credit Card Volume Remains Strong
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The U.S. card payments market is nowhere close to running out of steam, Barclays’ Darrin D. Peller said in a report. Although the US electronic payments market may seem to be well developed, there is still “an enormous addressable market of cash and checks” both within the country and in other developed markets.

This enormous market, along with even larger opportunities in emerging economies, offers “a long runway of sustainable growth” for Visa Inc (NYSE: V), Mastercard Inc (NYSE: MA) and other players in this ecosystem, analyst Darrin Peller said.

According to the Nilson Report, U.S. credit card payment volume is expected to record a CAGR of ~8.5 percent in 2014-2019, with debit at ~7.5 percent during the same period. “Despite ~50%+ of consumer payments being handled electronically, we see commercial payments, new markets, and eCommerce driving sustainable HSD volume growth in the U.S. for many years to come,” Peller wrote.

Commercial Payments

U.S. commercial payment volume has outperformed consumer spend on cards for several years. The Nilson Report mentioned that 15.85 percent of Visa’s US payment volume and 23.15 percent of MasterCard's US payment volume is contributed by commercial payments. Visa’s commercial payment volume growth came in at 12.7 percent and MasterCard’s recorded 12.2 percent.

“While U.S. commercial spend may be greater than $25tn (more than double the size of consumer spending), we estimate that the addressable market of U.S. card-able commercial spend is closer to $3tn-$4tn, of which less than one-third has likely been penetrated. Overall, we expect commercial payment volume to continue to grow faster than consumer payment volume and we see the opportunity as underappreciated for MA's and V's long-term growth,” Peller commented.

Posted-In: Barclays Darrin D. PellerAnalyst Color Best of Benzinga


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