San Francisco, CA, February 9--Visa USA said that consumers' use of debit and prepaid cards helped drive total spending up 19.1 percent last year to a record $1.045 trillion.
The company -- whose member banks are its shareholders -- said the use of debit cards reached record volumes in 2004 as spending increased 19.7 percent to $346 billion. Volume on prepaid cards grew 112 percent over last year.
Debit and prepaid cards have been gaining popularity during the past several years as consumers have begun to prefer noncash methods of payment and Visa, as well as rival MasterCard International, have spent more money on marketing these methods.
"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," said Carl Pascarella, president and CEO of Visa USA, in a statement.
Visa said it had 458 million cards issued in the United States at the end of the year, up 7 percent from 2003. The card giant said it posted double-digit growth in both consumer and business borrowing during the year.
Consumer credit card sales volume in the United States increased 11 percent to $51.7 billion. Cards issues to commercial and small businesses posted a 24 percent increase in volume during the year.
Visa's results come just days after MasterCard said worldwide spending for the year reached $1.46 trillion, a gain of 10.6 percent from 2003. The Purchase, N.Y.-based company also reported debit cards became more popular during the year, while the number of cardholders in the United States increased 6 percent to 338 million.
The growth seen in Visa and MasterCard in the United States comes at a time when both card giants prepare to face new competition. Last year, both companies lost a court battle which would have prevented member banks from issuing third-party cards such as American Express or Discover.
A number of deals have already been inked since then. Citigroup Inc., the largest credit card company in the world, has signed on to issue American Express cards. MBNA Corp. has also begun to issue AmEx cards. Morgan Stanley Inc., which operates Discover, has expanded its reach through deals with retailers such as Wal-Mart Stores Inc.
