One Bright Spot

  Antitrust actions, interchange wars, media criticism for allegedly helping consumers take on supersized debts, and a host of other woes could make members of the credit and debit card industry pessimistic about the prospects for the month-old year.
  But as the numbers roll in for the end of 2003, card issuers and merchant acquirers can take comfort in the fact that their industry remains solidly poised to gain as a rising sector of the economy grows beyond infancy: electronic commerce. While newer Internet payment forms such as eBay Inc.'s PayPal service could take some market share from cards, plastic remains the default currency of the Web, with somewhere around 90% of transaction volume.
  As noted in our Card Watch story on page 6, online sales in the 2003 holiday spending period rose nearly 30% from the 2002 period, according to comScore Networks. Visa USA, meanwhile, reported that its e-commerce volume was up 49%.
  Payment networks, research and tracking firms such as comScore, and the U.S. Department of Commerce's Bureau of the Census periodically come out with widely different estimates of e-commerce volume. Most of the differences arise from what's included and what's not in their surveys. Some include travel and entertainment; others do not, for example. But all of the different measures arrive at the same general conclusion: e-commerce volume is growing much faster than either retail sales in general or payment-industry charge volume as a whole.
  Of course, high growth rates are easy to come by when you're starting from such a small base. E-commerce still represents less than 2% of retail sales.
  All the signs, however, point to sustained increases in Web payment volume indefinitely. "Consumers are more receptive," an acquiring executive tells CCM, noting that a wider array of people now use the Internet for shopping.
  The Web is by no means the only card marketplace with growth opportunities. Visa notes that more than $4.8 trillion in consumer spending is still done with cash and checks. And in recent years, debit cards have enjoyed annual growth rates of 20% to 30% in transaction volume.
  Debit's future at the moment is muddled as the card associations, acquirers, issuers and merchants sort through the vast implications of the Visa/MasterCard settlements in the merchant class-action lawsuit over debit card acceptance (see our cover story on page 18). But the "muddledness" is mostly behind the scenes and has done little, if anything, to change the behavior of consumers who are increasingly taking a liking to debit.
  Debit likely will continue to grow much faster than credit in the coming years no matter how the dust settles in the merchant lawsuit. But as retailers and service providers become increasingly proficient at selling on the Web, just about every side of the card business, perhaps even PIN-based debit, can look forward to sustained increases in Web-based volume from now into the far future.