Industry News

02/12/2011 - The holiday shopping season is always an annual boon to retailers' bottom lines, as customers purchase gifts online and in stores across the country. In fact, Black Friday, the biggest shopping day of the year, was given its name because it has been known to help businesses transition from the "red" of debt into the "black" of profit.

This year, Black Friday lived up to the hype. The National Retail Federation found that retail sales were up 9.1 percent this year compared to Black Friday 2010, and according to data from comScore, online spending on Black Friday 2011 topped $800 million, which is roughly a 26 percent increase from last year's shopping holiday.

"The holiday spending season is off to a good solid start. Consumers definitely responded to the early openings and discount prices on Black Friday," said Silvio Tavares, senior vice president and division manager of First Data, according to Credit Union Times.

In terms of credit card processing, the holiday season has been a profitable one as well, as more consumers used plastic to pay for purchases than last year. Credit card issuers benefited from the greater number of transactions.

USA Today reports that payments made with credit cards on Black Friday this year rose 7.4 percent from the same day in 2010. During the same time period, payments with debit cards that required signatures increased 3.4 percent.

Online holiday shopping payments will likely see an even larger margin of growth in coming years. The news source states that credit cards will be used for 63 percent more online purchases from 2011 to 2016, while the number of debit card purchases online will only increase 2 percent.

This is welcome news to credit card processing companies and those involved in merchant services. Many consumers abandoned credit card use out of fear of accruing more debt during the economic downturn. However, as consumer confidence appears to grow stronger, customers seem to be more amenable to using plastic again.

According to USA Today, many factors have contributed to the revival of credit card use. For one, more incentives are available to credit card users as many banks eliminated debit card rewards programs to add more bonuses to their credit cards. More credit is also available, as credit card issuers have relaxed many of their lending standards to win back customers, even if they have lower credit scores and are deemed "higher-risk" to lend to.