Consumer credit card use remains high
April 18, 2013

As the economy improves, U.S. consumers are reaching for their cards more than ever before. Business that accept credit card purchases through electronic payment systems may see an increase in sales as more customers begin to feel financially secure. But companies may want to be careful with how they use consumer data, as recent research found customer confidence is key to client retention.

Credit card use stays strong
Earlier in the year, many credit card issuers felt uncertain about consumer spending. According to The Wall Street Journal, companies such as Visa and MasterCard projected customers would decrease credit card usage throughout 2013, causing businesses that accept plastic payments to worry about annual sales. However, economic analysts feel consumer purchasing tends to decrease after the holiday season and despite the increase in payroll taxes in January, customers will continue spending. A new study on retail revenue found credit cards sales increased to 8.1 percent in March from 7.9 percent in February.

Scott Valentin, an analyst with FBR Capital Markets told The WSJ businesses should have no problem driving sales through credit card processing software this year.

"One of the arguments could be made that the refunds were delayed but they were eventually coming," Valentin said. "People know they're going to get their money … so they could have used their credit cards as a cash flow tool to bridge the gap."

Help customers feel their information is safe
However, separate research reported consumers still do not feel their financial information is entirely safe when using credit cards at the point of sale. A global study by the Economist Intelligence Unit found client retention declines after consumers feel their financial privacy has been breached from using credit cards. Among 750 consumers, 32 percent said they would no longer frequent an establishment if their data had been compromised. Twenty-three percent of respondents said this had happened to them within the past two years and among them, 38 percent reported they no longer did business with the company involved.

Organizations should not feel uneasy to accept credit cards at the point of sale. As technology advances and more consumers begin to feel better about using plastic, accepting purchases with credit card processing software remains an easy way to increase sales and boost client retention.

Nexus: G-WEBCD1