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Credit Card Products for a New User Environment, 2020 - Contactless Payments Mean More to Merchants, Consumers, and Issuers than Ever

Research and Markets
·3-min read

Dublin, Sept. 22, 2020 (GLOBE NEWSWIRE) -- The "Credit Card Products for a New User Environment" report has been added to's offering.

This research, Credit Card Products for a New User Environment, indicates a shift in credit and debit patterns. Contactless payments mean more to merchants, consumers, and issuers than ever. Durable spending is down; consumptive spending is up. And, credit card deferrals do not seem to carry the stigma they once did. Rewards consume a large portion of interchange, and in a shifting market, all costs must receive consideration.

The pandemic changed life as we know it for credit card lenders and cardholders. Being a lender is not so simple anymore. Profitability is under siege, driven by loss provisioning, declining outstandings, changing spending patterns, debit competition, erosion in the power of rewards, and a deep recessionary environment. Primarily driven by the externality of the COVID pandemic, many behavioral changes among cardholders are likely to be long term, if not permanent.

"You cannot simply throw rewards at consumers and expect profitable market share, comments Brian Riley, Director, Credit Advisory, and the author of the research note Credit Card Products for a New User Environment. Riley adds that "Credit cards are certainly not going away, but expect lower returns, higher risks, and shifting purchase patterns at least through 2025.

And, do not forget the investor. It might be balance sheet lending or asset-backed securitizations enabling the credit card lender, but without the investment, card lending will cease. Lending is a risk-based business; it requires a return for tolerating the risk.

Highlights of the research note include:

  • Credit and debit purchase transactions

  • Credit and debit average ticket

  • Consumer panel data on usage and alternative payments

  • Changing payment methods since COVID-19

  • New payment technology usage

  • Estimated Income and expenses, 2018 versus 2020

Key Topics Covered:

1. Executive Summary

2. Introduction

3. Big Shifts in Volume, New Competition from Debit

4. Consumer Attitudes Were Already Trending Toward Debit

  • Pre-Pandemic Shifts

  • Post-Pandemic Shifts

5. Product Design for New Profitability Realities

  • Profitability Recap: A Swift Decline in Outlook

  • The Product Challenge: More than Reorganizing Deck Chairs

  • Top-Of-Wallet Strategies for Today's Profitability Challenges

6. Conclusions

7. References

  • Related Research

  • Endnotes


  • Combined credit/debit card transaction volumes in Q2 2020 are down 12% YOY

  • Combined purchase volume is down about 7% YOY in Q2 2020 driven by declining credit cards; debit now leads

  • Average ticket continues to grow but is up markedly for debit as "daily spend" categories remain strong

  • Banks are more affected by declining card outstandings, but some are attributed to earlier write-offs

  • Half of consumers say they are reducing credit card use, a new high since the end of the Great Recession

  • Those consumers decreasing their use of credit cards are most likely to use debit

  • Consumers have been consolidating their use of favored cards since 2018

  • Charge and GPR prepaid users are more likely to cite increased use due to the pandemic

  • Use of contactless transaction technologies has increased, compared with contact chip cards

  • Credit line changes attributed to the pandemic are relatively common, considering the short timeline

  • Loan loss provisions pose a significant drag on 2020 profitability, but softening income drives the longer-term threat

  • The immediate levers of profitability focus on policy and operational execution; product design is for the longer-term

  • The top-of-wallet strategy building the only card you need

Companies Mentioned

  • American Express

  • Discover

  • Mastercard

  • Visa

For more information about this report visit

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