With changing market conditions and new regulations causing credit cards to regain transaction share, credit cards are increasing their share of the consumer’s wallet for online purchases, according to Javelin Strategy & Research’s latest Online Retail Payments Forecast report.

The study shows a robust 16% increase in the U.S. online market as retail ecommerce sales continue to rise to $309 billion in 2011, and are further forecast to climb to an estimated $444 billion by 2016.

“After several years of declining use, credit cards are poised for resurgence,” says Beth Robertson, director of Payments Research at Javelin. “Despite the nation’s very rocky economic recovery, consumers appear to have halted their belt-tightening and bank incentives to use credit cards rather than debit are gaining appeal.”

In the five-year period from 2011 to 2016, assuming that the Durbin Amendment regulating debit card interchange stands, Javelin projects that total payments volume for the online use of credit cards by U.S. consumers will climb 63%, while the TPV for debit cards is expected to rise just 2% during that same period.

Online merchants have much to gain from this shift in payments share, Javelin says. Credit cards typically generate higher consumer spending and greater revenue for merchants. However, this change in behavior should also make consumers more conscientious about their online spending. Frenzied purchasing periods such as Cyber Monday can cause consumers to throw cautionary spending patterns to the wind and take advantage of the “deal” phenomenon.

Javelin’s study shows that consumers spend more money on a single online transaction using credit cards than when using other payment options, spending an average $82.10 with a major credit card versus $58.29 using a major debit card. Consumers also need to be especially careful during this holiday season too. As credit card fraud rates are higher than debit card fraud rates, consumers should set alerts and monitor their accounts carefully during this holiday period.


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