The Credit- and Debit-Card Business Is Booming

Credit, debit and prepaid cards in 2016 saw a purchase volume increase of 7 percent based on a year-over-year comparison, according to The Nilson Report, a Carpinteria, Calif.–based trade publication reporting on the payments industry. In America, credit, debit and prepaid cards’ purchase volume reached $5.648 trillion in 2016.

Nilson also recently announced a breakdown of how much retailers pay to accept cards. It is $1.49 for every $100 in card sales, David Robertson, publisher of The Nilson Report, said. American credit, debit and private-label cards generated $5.936 trillion to pay for goods and services last year.

The most prominent card companies, Visa, Mastercard and American Express, as well as private-label cards—think store cards—comprised $3.347 trillion in purchase volume, which amounted to 56.38 percent of all card spending.

Controversy on the fees merchants pay to use payment-card systems has been an issue for years. In 2010, the Durbin Amendment of the Dodd-Frank Financial Reform Act required the Federal Reserve to limit fees for debit-card processing.

Some merchant groups and bank-card issuers sued the Federal Reserve over the amount of merchant fees. In 2014, a D.C. Circuit Court of Appeals ruled that the Federal Reserve had rolled out the Durbin Amendment reasonably. But it continues to be an issue in Congress. The Washington, D.C.–based Retail Industry Leaders Association released a statement in April stating that it opposed an announcement by Jeb Hensarling (R–Texas) of the House Financial Services Committee to repeal swipe-fee reform.

“Preserving swipe-fee reform is essential for the retail community and will remain our top priority in the debate over financial reform,” Austen Jensen, vice president, government affairs for RILA, said.