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Current Payment Trends – Rewards Credit Cards Rpaid Growth Continues

Credit Card Payments are Growing

Consumers and businesses are diversifying the ways they pay for purchases. Often the choice of payment is driven by incentives to use cards such as rewards programs for consumers, and “rebate” programs for businesses.

47% of cardholders who switched to a new card within the last 12 months did so for a better rewards program.1

 The Consumer Financial Protection Bureau of CFPB estimated that up to 88% of purchases were on rewards cards. 2 

 Issuing banks charge merchants a higher interchange fee to pay for the marketing and expenses related to these reward programs.

While checks and ACH remain the dominant B2B payment methods, 67% of companies in a recent survey are satisfied with credit cards as a way to send B2B payments.3

As the purchases shift from checks to credit or purchase cards to pay suppliers accelerates, so makes the impact on the operational and cost structure of your business.

Purchase cards simplify accounts payable while complicating accounts receivable.4

 Remote Payments are on the Rise

Remote payments continued to grow as a share of total general-purpose card payments. The number and value of remote payments increased 22.8 percent from 2012 to 2015 and 14.8 percent respectively from 2016 to 2017. The amount and value of in-person payments grew 7.2 percent and 4.4 percent.5

ACH/EFT Payments Are Up

Network automated clearinghouse (ACH) payments exhibited accelerating growth, increasing 5.7 percent by number and 6.9 percent by value from 2016 to 2017.6

Check, and Cash Payments Continue to Decline

Check payments showed an accelerated decline of 4.8 percent by number from 2016 to 2017.  ATM withdrawals declined by number and increased by value, consistent with changes reported for 2012 to 2015.7

If your organization provides products and services to other businesses, does your cost model accurately reflect the costs of accepting and processing a higher percentage of card payments?   If your organization sells direct to consumers, does your cost model reflect the decline in cash and check payments?

 Complexity Does Not Work in Your Favor

Not only is card usage up and cash and check payments in rapid decline, but payment option types continue to evolve at an ever-increasing rate.

The launch of the Fuze card, which bundles debit, credit, gift, and membership cards into a single account and card is a good example.

While innovation improves convenience and choice for consumers, it complicates the payment landscape and can increase the cost for merchants. To remain competitive Merchants will need to accept a wide variety of payment types and adopt fee-sharing models to manage costs and protect margins.

To navigate this ever-changing environment, merchants will need a payments partner who not only understands the complexity but who can steer them through this maze of card rules and regulations.

  1. D. Power 2018 Credit Card Satisfaction Study 
  2. CFPB The Consumer Credit Card Market Report 2017
  3. B2B Payments Tipping Point: All Signs Point to Innovation 2018
  4. Deloitte Payment Trends 2019
  5. Deloitte Payment Trends 2019
  6. Deloitte Payment Trends 2019
  7. Deloitte Payment Trends 2019