Report: Credit Cards Regaining Share in Online Payments

Dec. 1, 2011

A significant shift in the regulatory environment in the payments industry will result in a migration back toward credit cards from debit for online payments, according to a new report from California consultancy Javelin Strategy & Research. In its 4th Annual Online Retail Payments Forecast 2011-2016: New Regulations Leave Credit Poised for a Comeback Javelin projects—assuming the Durbin Amendment stands as currently implemented—that total payments volume (TPV) for the online use of credit cards by U.S. consumers will climb 63 percent in the next five years, while the TPV for debit cards is expected to rise just 2 percent during that same period. “After several years of declining use, credit cards are poised for resurgence,” said Beth Robertson, director of payments research at Javelin. “Despite the nation’s very rocky economic recovery, consumers appear to have halted their belt-tightening and bank incentives to use credit cards rather than debit are gaining appeal.” In addition to credit, alternative payments also are gaining traction in e-commerce. Javelin predicts alternative online payments will grow by $30 billion through 2016, accounting for 19 percent of online retail payments—just two percentage points below debit’s projected share.