Spending on bank cards surged in the United States last year, thanks to brisk gains in corporate and debit card transactions.

Visa U.S.A. said spending on its cards climbed 16% last year, to $610.3 billion-the seventh consecutive year of double-digit growth.

And MasterCard International said U.S. spending volume on its credit and debit cards rose 17% in 1998, to $310.7 billion.

The disclosures painted a picture of a vibrant industry that is poised for further growth. Visa is shooting for annual spending of $1 trillion by 2002.

"We've only scratched the surface," said Carl F. Pascarella, chief executive officer of Visa U.S.A. "We intend to work with our banks to continue to capture a greater share of the overall consumer and commercial payment market."

Visa highlighted its gains and prospects in an annual announcement on Wednesday. In response, MasterCard released its own volume totals and said it would release a full annual report next week.

American Express Co., meanwhile, said U.S. card-billed spending was $165.6 billion last year, 10% higher than in 1997. The company does not issue debit cards, which are included in the other figures.

Visa and MasterCard attributed their gains to targeted marketing efforts and the rising popularity of debit cards and charge cards for businesses. Those categories, along with card-based transactions on the Internet, are sure to support strong growth in the years ahead, Visa said.

In 1998, Visa made further gains in market share against other card brands, accounting for more than half of all spending on cards. But Mr. Pascarella said it was more important to penetrate new markets than to jockey with other card brands.

"If we just use the traditional measurement of payment card market share, we're the undisputed leader," Mr. Pascarella said. "But I don't think we're going to be serving our banks if we do that. We've got to open up against all other forms of payment-to go out and attack cash, checks, whatever is going to be the payment mechanism in electronic commerce."

To him, the broader and more important yardstick is personal consumption expenditures, in which payment cards compete against cash and checks. Last year, Visa captured 10.5% of PCE, versus 9.6% in 1997.

The growth, Visa said, represented $52.3 billion in spending that would otherwise have been done with different modes of payment.

"We have to take the metric of market share out of our thought process and start thinking about personal consumption expenditures," Mr. Pascarella said. "We've got such phenomenal opportunities out there to continue to build bank profitability, and I'm not sure we're close to reaching our potential yet."

MasterCard said transactions on its cards in the United States totaled 3.6 billion, 17% higher than in 1997. The number of cards in force-207.3 million-was up 11.3%.

MasterCard attributed the growth to the success of its "Priceless" advertising campaign and to its "key member focus strategy," a new approach in which the association caters more toward its largest issuers.

Mr. Pascarella said his organization has made accomplishments on several fronts, but has achieved "not nearly enough."

"We just can't tolerate complacency now," Mr. Pascarella said in an interview. "Our goal should be to surpass $1 trillion (in U.S. volume) by 2002 and make sure that volume is profitable to the banks."

"As we reflect on another successful year, we are increasingly confident that the strategic course set by the Visa U.S.A. board and our emphasis on a strong brand business model will increase Visa's momentum in this rapidly changing industry," said William Boardman, senior executive vice president of Banc One Corp. and chairman of the Visa U.S.A. board of directors.

"Visa will continue to help banks better use the many attributes of the Visa brand and its system, while building their own individual brands and services to strengthen relationships with their customers."

Visa said transaction volume on its consumer credit cards grew 8% last year, to $443.8 billion.

Growth was even more brisk in commercial cards and debit cards, which have been Visa priorities.

Spending on the Visa check card-a debit product-increased 43%, to $134.7 billion, in 1998, while transactions on corporate, purchasing, and business cards rose 41.7%, to $31.7 billion, the association reported.

Visa anticipates continued growth in the business-to-business sector, particularly in light of its prominence in the General Services Administration's SmartPay program. Banks that issue Visa commercial cards won 75% of the federal government's payment card business, the association said.

Visa said its credit, debit, and commercial cards represented 52.8% of the U.S. general purpose card market last year, an increase of less than 1% over 1997.

David Robertson, president of the newsletter The Nilson Report, called the figures Visa released "inconclusive" and took issue with the way some were calculated.

He said Visa's market share numbers include purchases made on Visa cards as well as balances transferred to Visa cards, which "is not the most accurate measurement."

Nilson Report places Visa's market share more than 2 percentage points lower than the association's own calculation: 50.6%, up from 49.6% in 1997. It states MasterCard's 1998 share as 25.44%, up slightly from 25.25% in 1997.

American Express' market share dropped, according to Nilson, to 17.70% in 1998 from 18.43% in 1997. Discover's number was also down, to 5.96% in 1998 from 5.55% in 1997.

Methodological quibbles aside, Mr. Robertson said, "You're still going to see strong growth by Visa, because they had a great year. It still has a good story to tell."

Transactions conducted on the Internet-both by consumers and between businesses-represented about 1% of Visa's transaction volume last year, or about $6 billion in spending. Though electronic commerce is "a blip" in Visa's statistics right now, Mr. Pascarella predicted it would amount to $300 billion of the projected $1 trillion in a few years.

On-line transactions picked up in the fourth quarter of 1998, when Web sites posting the Visa logo saw sales quadruple, Mr. Pascarella said.

"It is important for us to go out and capture the (on-line) market in absolute terms rather than relative terms," Mr. Pascarella said, scoffing at the high percentage increases being reported. "A number of transactions that are taking place in e-commerce are still settled with money orders or other forms of payment, and we've got to get rid of that."

Hitting growth targets will put Visa "on the right track," Mr. Pascarella said, but will also prompt it to keep aiming higher.

"I don't think you can afford to say, 'Gee, we had a good year last year,'" he said.

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