PIN Debit Transactions Will Exceed Signature Debit by 2009

FRAMINGHAM, MA – December 21, 2005 – Global independent research and advisory firm Financial Insights, an IDC company, today announced its forecast results for the U.S. General Purpose Card market over the next 4 years. The report, U.S. General Purpose Card 2005-2009 Spending Forecast and Analysis, examines the growth over the next four years in spending on all types of general purpose cards and provides a forecast of credit and debit card transactions and spending in the United States from 2005 to 2009. Both consumer and commercial transactions are included in this study.

This Financial Insights study forecasts strong growth over the next five years in spending on all types of general purpose cards, but this growth will not be equally distributed. Premium brands such as American Express will grow more quickly, as will cards that offer merchants a lower transaction cost, in particular PIN debit cards.

In fact, PIN debit cards are forecast to overtake signature debit cards in total transaction volume by the end of 2009. These changes are being driven in part by legal pressures weighing on Visa and MasterCard that are likely to force down interchange, making PIN debit more attractive for issuers relative to signature debit and leveling the playing field between the large association-branded cards, such as Visa and MasterCard, and the premium or niche brands, such as American Express or Discover.

On the commercial side, American Express has heretofore been the dominant provider, but both Visa and MasterCard will increase their share of the market at its expense, as shown in the Figure. This reflects the strides that both card associations have made in improving the attractiveness of their commercial card products to businesses as well as the growing business acceptance of cards as a viable payment option. It is not so much a showing of weakness by American Express as it is a showing that the market has become truly competitive.

According to Aaron McPherson, research director for Payments at Financial Insights, "Dealing with the rapidly changing card market will require more flexible strategies from card issuers and acquirers, as well as more flexible technology to back up these strategies."

For more information on obtaining this report U.S. General Purpose Card 2005-2009 Spending Forecast and Analysis, (FIN1692, December 2005), please contact: sales@financial-insights.com.

About Financial Insights, an IDC Company

Financial Insights provides independent research, custom consulting, and detailed multiclient studies on the technology issues and challenges facing the financial services industry. Our global research covers topics of strategic importance to corporate and retail banks, insurance carriers, asset management firms, securities and brokerage firms. Our local practices in Asia Pacific, Latin America and Europe, and Canada add an in-depth regional viewpoint. Financial Insights, an IDC company, is headquartered in Framingham, Massachusetts, USA. IDC is a subsidiary of IDG, the world's leading IT media, research, and exposition company.

# # #