Chapter 1: Methodology and Executive Summary

Scope and Methodology
Report Methodology
Chapter 1: Executive Summary
Chapter 2: Market Overview

The Switch From Credit Cards to Debit Cards
Consumers Now Switching From Debit to Credit
Table 1-1: 2011 ¨C Credit Card Use Growing More Quickly than Debit Card
Online Bill Payments

Chapter 3: Demographics of Cardholders by Generational Cohort

Seniors
Older Boomers
Younger Boomers
Generation X
Generation Y (Millennials)

Chapter 4: The Marketing of Payment Products

Revamping Debit Cards
The Impact of New Channels
Social Media is Made for Retail Card Issuers

Chapter 5: Inter-Relationship of Payment-Related Behaviors

Bill Paying Channels Used by Race/Ethnicity
Bill Pay Channels Used by Household Income
Figure 1-1 Online and In-Person Bill Pay Channels Correspond to Household Income
Bill Pay Channels Used by Education
Debit, Prepaid and Credit Card Ownership by Race/Ethnicity
Debit, Prepaid and Credit Card Ownership by Income
Debit, Prepaid and Credit Card Ownership by Level of Education
Credit Card Used Most Frequently by Race/Ethnicity
Credit Card Used Most Frequently by Household Income
Credit Card Used Most Frequently by Level of Education

Relationship Among Payment Behaviors

Correlations between Channels and Other Channels Used for Bill Payment
Correlation between Credit Card Ownership and Bill Payment Channels

Conclusion

Chapter 2: Market Overview The American Consumer: Expenditures and Payments

Introduction

Table 2-1: Aggregate Household Disposable Income ($ Billions), 1990-2011
Table 2-2: Characteristics of Households, 2010
Table 2-3: Consumer Expenditures by Category and CAGR, 2008-2010 (Average Household)
What We Buy With Our Money
Figure 2-1: Average Household Expenditures By Category, 2010
Declining Disposable Income Drives Changing Purchasing Behaviors
Pressure on Household Expenditures: Food Price Outlook, 2011 and 2012

Global Pressure on Economy Is Growing
Consumer Expenditures by Age
How We Pay

Table 2-4: Number of Noncash Payments, 2006-2009

The Switch from Credit Cards to Debit Cards

Figure 2-2: U.S. Household Savings Rates, 1990-2010 (percent saved)
Table 2-5: Third Quarter 2011 Savings Rates Begin to Return to More Typical (Low) Levels
Outstanding Receivables for Credit Cards Decline
Table 2-6: Post-Recession, America¡¯s Credit Card Debt Has Been Declining
Figure 2-3: Credit Card Debt Has Declined Despite Population Growing at a CAGR of .75%
Table 2-7: 2011 ¨C Credit Card Use Growing More Quickly than Debit Card

Our Credit Cards

Table 2-8: Frequency of Credit Card Use By Brand, 2011
Table 2-9: Credit Card Preferences by Income, 2011: Credit Card Used Most Frequently
Credit Card Issuers
Table 2-10: Largest Credit Card Issuers (By Purchasing Volume), 2010

Our Debit Cards

Table 2-11: Largest Debit Card Issuers (By Purchasing Volume), 2010
Table 2-12: Debit Cards in Circulation, Purchase and Transaction Volumes, VISA and MasterCard, 2010
Table 2-13: Debit Cards: Ownership and Usage for Cash Withdrawals, 2011
Table 2-14: Debit Cards: Ownership and Usage for Purchasing, 2011

Prepaid Cards

Figure 2-4: The Face of the Card: Prepaid and Credit Cards Demonstrate Different Relationships Among Partners
Table 2-15: Brands of Open-Loop Prepaid Cards Used in the Past 12 Months)
Table 2-16: Prepaid Card Use by Income in the Past 12 Months

Growth of Electronic Payments Category

Table 2-17: Payment Volumes and Forecast: Debit, Credit and Prepaid, 2006-2016

Payment Channels: Online and Mobile

Table 2-18: Popularity of Online Alternative Transaction Providers, 2011

Growth of Online Retailing and Mobile Payments

Table 2-19: PayPal¡¯s Payment Transaction Volume ($ billion)
Table 2-20: PayPal Mobile Transaction Volume, 2010 - 2013
Mobile Commerce Hits the Mainstream
Social Media, Mobile Commerce and a Vente Latte
Figure 2-5: Step One: Starbucks Rewards
Figure 2-6: Step Two: Mobile Starbucks
Alternative Payments
Creating Truly Mobile Commerce
Paying Bills: Mail, Online or Phone
Table 2-21: How Do You Pay Your Bills? Channels Used, 2011
Table 2-22: Bill Payment Channels by Income, 2011
Table 2-23: Bill Payment Channels by Age, 2011
After All That Buying, How Do We Feel?
Table 2-24: Consumer Attitudes About Their Personal Finances
Conclusion

Chapter 3: Demographics of Cardholders by Generational Cohort

Introduction

Figure 3-1: Generations in the Workforce, 2011

Seniors

Who Are They?
Oldest Seniors ¨C Who Are They?
Table 3-1: Characteristics of Oldest Senior Households
Table 3-2: Oldest Seniors: Consumer Expenditures by Category and CAGR, 2008-2010 (Average Household)

Younger Seniors

Table 3-3: Characteristics of Younger Senior Households
Table 3-4: Younger Seniors: Consumer Expenditures and CAGR by Category, 2008-2010 (Average Household)
Seniors: How They Pay Their Bills
Table 3-5: Channels Used by Seniors to Pay Recurring Bills, 2011
Seniors: Credit Cards They Use Most Often
Table 3-6: Seniors vs. All Consumers: Credit Card Used Most Often, 2011)
Figure 3-2: Favorite Credit Card, Seniors vs. All Consumers, 2011

Baby Boomers ¨C The Oldest Boomers

Figure 3-3: Age Distribution of Baby Boomers, 2011
After Years of Privilege, Older Boomers are Struggling
Figure 3-4: Unemployment Rate by Age, 2011
Long-term Unemployment Among Older Workers Negative Force on Group¡¯s Disposable Income
Oldest Boomers Are Downwardly Mobile
Table 3-7: Characteristics of Oldest Baby Boomer Households
Table 3-8: Oldest Baby Boomers: Consumer Expenditures and CAGR by Category, 2008-2010 (Average Household)
Oldest Boomers: How They Pay Their Bills
Table 3-9: Channels Used by the Oldest Baby Boomers to Pay Recurring Bills, 2011
Oldest Baby Boomers: Credit Cards They Use Most Often
Table 3-10: Oldest Baby Boomers vs. All Consumers: Credit Card Used Most Often, 2011

Baby Boomers ¨C The Youngest Boomers

Younger Boomers Are Also Downwardly Mobile
Table 3-11: Characteristics of Youngest Baby Boomer Households
Table 3-12: Youngest Baby Boomers: Consumer Expenditures and CAGR by Category, 2008-2010 (Average Household)
Youngest Boomers: How They Pay Their Bills
Table 3-13: Channels Used by the Youngest Baby Boomers to Pay Recurring Bills, 2011
Youngest Baby Boomers: Credit Cards They Use Most Often
Table 3-14: Youngest Baby Boomers vs. All Consumers: Credit Card Used Most Often, 2011)

Generation X

Table 3-15: Characteristics of Gen X Households
Different Marketing Strategies Speak to Xers
Categories of Declining Spending
Table 3-16: Generation X: Consumer Expenditures and CAGR by Category, 2008-2010 (Average Household)
Generation X: How They Pay Their Bills
Table 3-17: Channels Used by Generation X to Pay Recurring Bills, 2011
Generation X: Credit Cards They Use Most Often
Table 3-18: Generation X vs. All Consumers: Credit Card Used Most Often, 2011

Generation Y

Figure 3-5: Unemployment among 25-34 year olds, 1968 ¨C 2011 (Numbers in thousands)
Millennials: Low Wages, Underemployment and a Trillion Dollars in College Debt
Generation Y of Concern to Payments Industry Participants
Table 3-19: Characteristics of Gen Y Households
Table 3-20: Generation Y: Consumer Expenditures and CAGR by Category, 2008-2010 (Average Household)
Generation Y: How They Pay Their Bills
Table 3-21: Channels Used by Generation X to Pay Recurring Bills, 2011
Generation Y: Credit Cards They Use Most Often
Table 3-22: Generation Y vs. All Consumers: Credit Card Used Most Often, 2011)

Marketing Approach to Millennials Is Different
Conclusion

Chapter 4: The Marketing of Payment Products

Changing Landscape for Banks and Retailers
Marketing Debit Cards

Bank Revenue on Debit Transactions Cut in Half
Table 4-1: Debit and Credit Interchange Fees 2006-2010
Table 4-2: Bank Interchange Profits on Debit Transactions
The New Math 1-0 = 1+1: Retailers and Banks Refuse to Lose
Debit Card Exemptions from Dodd Frank
Traditionally Promoting Debit Cards
Table 4-3: Signature and PIN Debit Comparables

Marketing to Retailers and Billers

Table 4-4: Debit Savings Over Other Payment Options
Then: Promoting Signature Over PIN Debit
Now: Signature Debit. Dead? Dying? Feeling Better?
Pre-Dodd-Frank: Encouraging Use of Signature Debit
Table 4-5: VISA Check Card Statistics circa 1998
Marketing ¨DCheck Cards¡¬
Rewards Offered to Signature Debit Users
Debit Transaction Trigger Cash to Savings
Points or Miles Redeemable for Merchandise or Travel
Eliminating Debit Programs in Q2 2011
Merchant-funded rewards programs
MFDs Create Generational Cohorts of ONE
MFDs and Demonstrable, Provable Marketing Results
Cardlytics
How It Works
Value for Each Participant: Merchant, Bank, Customer
MFDs: Who Gets the Money?
Figure 4-1: Merchants Pay 10-15% of a Purchase to the Issuing Bank
Removing the Carrots for Using Debit Impacts Consumer Behavior
Table 4-6: New Fees Charged for Formerly-Free Debit Cards
Overdraft Fee Income Challenged at Same Time
Principal Features of Overdraft Legislation
Table 4-7: Bank Income From Debit Cards and Overdrafts in Decline?
Maintaining Overdraft Income by Tweaking the Income Stream Formulation
Back to Credit Cards?
Table 4-8: 2011 ¨C Credit Card Use Growing More Quickly than Debit Card
Introducing the New and Improved¡-Credit Card
Driving the New Focus on Credit Cards
Loyalty Drivers Across the Generations
Table 4-9: Credit Card Loyalty Differs Across Generations
Tapping the Changing Credit Card Market: Newest Channels Have Greatest Impact
Social Media = New Channel for Payments Education, Product Loyalty and Use
Social Media Is Made for Retail Card Issuers
Facebook Special Offers for Cardholders
Figure 4-2: American Express drives customers to its messages with discounts

Who Uses the Internet/Social Media Best?

Link, Like, Love
Facebook Allows Card Brands to Involve Cardholders and Other Fans in Their Charitable Giving Initiatives
Chase Community Giving Uses Multi-Media Blitz
Figure 4-3: Chase links its Community Giving program with a multi-media strategy
Chase Gives Power to the People
Capital One: Giving, Football and Unedited Consumer Feedback
Wells Fargo: Can Too Much of a Good Thing Be Too Much?
Social Media Links Brand Loyalty and Payments

Conclusion

Chapter 5: Inter-Relationship of Payment-Related Behaviors

Introduction
Bill Payment

Bill Paying Channels Used by Race/Ethnicity
Table 5-1: Bill Paying Channels by Race/Ethnicity
Bill Pay Channels Used by Household Income
Table 5-2: Bill Payment Channels by Income, 2011
Figure 5-1: Online and In-Persona Bill Pay Channels Correspond to Household Income
Bill Pay Channels Used by Education
Table 5-3: Bill Paying Channels by Level of Education
Figure 5-2: Bill Payment Channel Preferences by Education, 2011

Ownership of Debit, Prepaid and Credit Cards

Debit, Prepaid and Credit Card Ownership by Race/Ethnicity
Table 5-4: Debit, Prepaid and Credit Card Ownership by Race/Ethnicity
Figure 5-3: Use of Payment Products Varies by Race/Ethnicity, 2011
Debit, Prepaid and Credit Card Ownership by Income
Table 5-5: Debit, Prepaid and Credit Card Ownership by Income, 2011
Debit, Prepaid and Credit Card Ownership by Level of Education
Table 5-6: Debit, Prepaid and Credit Card Ownership by Level of Education

Ownership of Credit Cards

Credit Card Used Most Frequently by Race/Ethnicity
Table 5-7: Credit Card Used Most Frequently by Race/Ethnicity
Credit Card Used Most Frequently by Household Income
Table 5-8: Credit Card Used Most Frequently by Household Income
Credit Card Used Most Frequently by Level of Education
Table 5-9: Credit Card Used Most Frequently by Level of Education

Relationships Among Payment Behaviors

Correlations between Channels and Other Channels Used for Bill Payment
Table 5-10: Use of Additional Channels in Bill Payment
Correlation between Credit Card Ownership and Bill Payment Channels
Table 5-11: Bill Payment Channel Preference by Credit Card Ownership
Figure 5-4: Bill Payment Channels Used by Credit Cardholders vs. All Consumers, 2011

Conclusion