Visa USA Achieves Record Growth in 2004

SAN FRANCISCO – Visa USA, the nation’s leading payment brand and largest payment system, announced today that sales volume on Visa-branded cards (credit, debit, prepaid, and commercial) grew to a record $1.045 trillion in calendar year 2004, a 19.1 percent increase over 2003. (Data is for U.S. Visa Cards)

Visa’s total U.S. volume, including sales and cash, surpassed $1.3 trillion, an increase of 17.9 percent.

The primary drivers for Visa’s growth were 1) continued innovations to facilitate card acceptance and usage in emerging market segments; 2) strong growth in the debit and prepaid card categories; 3) increased efforts to promote Visa Signature, a high-reward, high-value credit card for the “New Affluent”; and 4) continued strides in the small business segment, where Visa is poised to secure the leadership position in the first quarter of 2005.

“By any measure, 2004 was a record year for Visa USA and our Members,” said Carl Pascarella, president and CEO of Visa USA. “Visa’s performance last year is proof that we continue to deliver what consumers and businesses value most – payments that are convenient, secure and accepted at an unsurpassed number of locations worldwide. That’s why Visa continues to be the payments brand that cardholders turn to most often.”

At the close of 2004, Visa Members had issued 458 million cards in the United States, an increase of seven percent over the previous year.

Product Growth Across All Categories
Visa achieved double-digit growth across every product category during the past year, including credit, debit, and commercial.

“Visa provides the broadest array of payment options that allow consumers and businesses the opportunity to pay how they want: now, later, or in advance,” continued Pascarella. “As we drive the migration from cash and checks, we will continue offering our stakeholders the most tailored and effective products to meet their ever-changing needs.”

Additional product highlights include:
Consumer Credit: Consumer credit cards remained a strong growth driver and significant source of Visa’s overall sales volume in 2004, gaining more than 11 percent to $517 billion in the United States. This growth was driven in part by an increase in “everyday spend” and the success of Visa Signature product, as volume increased more than 28 percent to $98 billion, solidifying Visa’s lead in the affluent segment, with approximately 37 percent of card spend in this target demographic.

Consumer Debit: Visa’s debit products including the Visa check card and Interlink, experienced record volumes last year, accounting for 40 percent of Visa volume and 59 percent of total transactions in the United States. Visa check card volume grew 19.7 percent to $346 billion.

Prepaid: Volume on Visa prepaid cards jumped 112 percent year over year, driven by the association’s robust product set, including payroll, gift, corporate incentive, benefits, government disbursement, Visa TravelMoney, and general-purpose reloadable cards. In 2004, Visa worked with more than 140 Members and multiple partners, including retailers, malls, third-party health plan administrators, brand- name employers, as well as 13 states in the United States to launch new prepaid programs.

Commercial/Small Business: As one of Visa’s key growth areas for 2004, commercial cards in the United States posted record gains of more than 24 percent compared to 2003.

Visa’s strong position in the commercial market segment was also acknowledged by an independent research report (Packaged Facts) that recognized Visa as the largest commercial card brand by charge volume and number of cards, driven largely by gains in the small business category. Visa’s focus on small business drove volume gains of 38 percent over 2003, outpacing the industry’s 30 percent average growth rate.

Expanding Acceptance – Expanding Opportunities
As the leader in the migration to electronic payments, Visa continuously works with merchants to maximize the value of payment card acceptance, offering cardholders more places they can use their cards and payment choices beyond cash and checks. In 2004, Visa volume in new and emerging merchant segments increased 25.2 percent to more than $152.7 billion, compared to 2003.

Visa also continued to make enhancements to services that address the business needs of merchant partners, expanding acceptance and making payments easier for consumers. These initiatives included:

Residential Utilities Program: To develop this next frontier in bill payments, Visa launched a multipronged campaign to expand card acceptance at utilities. A key component of this program is the creation of a new fee structure for consumer card transactions that provides greater incentives for utilities to accept payment cards, while encouraging a reduction in the number of utility merchants that charge convenience fees on Visa card transactions.

Re-engineering Disputes (RED): The RED initiative has expedited the process for resolving cardholder-purchase disputes by streamlining rules and by increasing automation and communication through the introduction of Visa Resolve Online. Compared to the baseline year of 2001, the rate of chargebacks has declined 46 percent resulting in nearly 5.9 million fewer chargebacks in 2004 alone. Members benefited from more than $300 million in reduced operational expenses, and merchants benefited from more than $750 million in reduced chargebacks.

Visa Account Updater: By automating the process of updating customers’ Visa card information for select account-on-file merchants and driving value to merchants and Issuers through reduction of customer service, back-office costs, and customer attrition, Visa Account Updater now has been implemented by more than 100 of the top on-demand and bill payment merchants in the United States.

Additional 2004 Milestones
Reliability: Visa continued to enhance VisaNet, already the largest, most advanced and reliable payment system in the world. With the continued rapid growth in transaction volume, the enhancements ensure that Visa will continue to deliver secure and reliable payments, even during the busiest shopping days of the year. Today, VisaNet handles more than 100 million transactions each day around the world and is capable of processing as many as 6,200 messages per second.

Security and Protection: Visa reinforced its commitment to making electronic payments even more secure for Members, merchants, and cardholders. Through various initiatives and cardholder protection benefits (Zero Liability fraud protection), Visa’s fraud level remained at an all-time low of approximately five cents on every $100.

Brand: Visa provided compelling opportunities to its Members and merchants to connect with consumers, drive card usage, and build their business through fully-integrated marketing activities. Through Visa’s sponsorship of the ATHENS 2004 Olympic Games, more than 212 U.S.-based Members and 1,900 merchants participated in Visa’s Olympic marketing program.

Rewards: Following its launch in January 2004, Visa Extras has been adopted by 1,400 U.S. Issuers, offering flexible rewards platform to their cardholders. Visa research indicated that incremental increases in average cardholder sales volume ranged from 27 percent to 49 percent across participating card products, indicating strong growth potential for 2005. Combined with the launch of Visa Traditional Rewards, which provides minimum rewards requirements for qualifying Visa consumer credit rewards products, Visa Members and merchants are better poised to compete for loyalty-driven customers.

Looking Ahead to 2005
“We are optimistic about the future due, in part, to continued strong growth in discretionary spending, such as travel and entertainment, home and garden, and specialty retail stores, which illustrates that consumers are relatively confident with their financial positions and job prospects for the future,” added Pascarella. “Further, we see additional opportunities for growth by introducing new payment options to meet the evolving needs of cardholders. These opportunities include prepaid cards that allow for health benefits; commercial cards that offer greater benefits and integrated tracking; as well as consumer credit and debit cards that offer unique and personalized rewards.”

At the end of 2004, the Federal Reserve noted that transactions on cards surpassed transactions made with cash and checks for the first time.

“There remains a huge opportunity for growth in 2005 and beyond, with $19 trillion of transactions still being made with cash and checks,” said Pascarella. “Visa is working more closely with Members and merchants than ever before to accelerate and expand new opportunities to use safer, faster, more convenient payments. Visa will continue to invest aggressively, fortifying its world-class brand, enhancing its unparalleled network, and collaborating with Members and merchants to deliver value for their customers.”