Unlocking the Power of Plastic Money: A Deep Dive into Credit Card Processing

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It is not hypothetical anymore that consumers spend more or make impulsive purchases using credit cards (plastic money). In a first-ever investigation examining brain activity at the time of purchasing using fMRI technology by MIT, researcher Prof. Drazen Prelec found that paying via credit card activates the dopaminergic reward region of the brain and minimizes the pain of spending. As a result, consumers frequently find themselves exceeding their initial budgets and making impulsive purchases.

Credit cards have evolved into indispensable financial instruments that empower individuals and businesses alike, significantly influencing global economies and facilitating seamless transactions. As of 2021, a remarkable 35% of the global population aged above 15 years possessed credit cards. With a growing number of credit card users and the ascendancy of e-commerce, credit card payment processing stands as a pivotal pillar in the contemporary financial landscape. In this article, we will delve into the details of credit cards and usages and also suggest the best credit card processing companies.

"In today's globalized world, credit cards are the international trader's best friend." - Jane Smith, International Trade Specialist

The Global Surge in Credit Card Usage

The rise of credit card usage is nothing short of remarkable. According to a report by Statista, the number of credit card users worldwide reached a staggering 2.8 billion in 2021. This figure is expected to grow further as more people embrace the convenience of cashless payments.

The United States leads the pack when it comes to credit card users, with approximately 1.3 billion active cards. However, other countries are rapidly catching up. China, for instance, boasts over 800 million credit card users, showcasing the global appeal of this payment method.

However, the percentages of the population using a credit card in different countries show different pictures. As per the World Bank, Canada has the most significant portion (83%) of the population using and preferring credit cards, much more than the USA. In this race, Israel comes 2nd, where 79% of the population (15+) use credit cards while purchasing online. Similarly, Iceland with 74%, Hong Kong with 72%, and Luxembourg with 70% come respectively at third, fourth and fifth place in terms of people having credit cards.

Interesting Facts:

  • Globally, there are 2.8 billion credit cards in circulation.
  • In Canada, 83% of people aged 15+ have credit cards, the largest % in the world.
  • Visa, MasterCard, Union Pay, JCB, American Express, and Discover are the world’s largest card networks.
  • In 2022, 624.86 billion transactions were made globally using global network cards to pay for goods and services, an increase of 7.5% from 2021.
  • As per the Nilson Report, purchases of goods and services involving credit, debit and prepaid cards, along with debit card withdrawals and credit card cash advances, soared to an astonishing $40.645 trillion in 2022, 1st time in history.
  • The number of credit cards linked to cryptocurrencies is increasing; in the first half of 2022, Visa reported $1 billion in revenue from these cards.
  • Generally, consumers spend an average of only $22 using cash, while if they use a credit card, this expands to $57. It clearly shows that if businesses accept credit card payments, they can increase their sales by 160%.

Credit Cards and E-commerce: A Perfect Pair

Credit cards and e-commerce have formed a symbiotic relationship that continues to thrive. As online shopping gains more prominence, the use of credit cards for digital transactions has skyrocketed. In 2021, global e-commerce sales hit $5.2 trillion, with credit cards serving as the preferred payment method for over 40% of online shoppers.

E-commerce giants like Amazon, Alibaba, and eBay are heavily reliant on credit card payment processing to facilitate transactions across international borders. Accepting credit card payments not only enhances user experience but also fuels economic growth by breaking down geographical barriers in the world of commerce.

Credit Cards and International Trade

The global market is no longer limited by geographical constraints, thanks to the widespread use of credit cards in international trade. A study on the "Impact of Plastic Money" published in the Journal of Business highlights the importance of credit card usage in international transactions.

The study reveals that credit cards facilitate over 60% of international trade transactions, enabling businesses to engage in cross-border commerce with ease. These plastic cards bridge the gap between buyers and sellers, fostering international cooperation and boosting economies across the globe.

The Appeal of Credit Cards

But what drives this global phenomenon of credit card usage? There are several compelling reasons why people prefer to use credit cards and why businesses should accept credit card payments:

  1. Convenience: Credit cards offer a convenient and secure way to make payments. They eliminate the need to carry large sums of cash, reducing the risk of theft or loss.
  2. Rewards and Cashback: Many credit cards come with rewards programs, offering users cashback, airline miles, or other incentives. These perks motivate people to use credit cards for their everyday expenses.
  3. Build Credit History: Responsible credit card use can help individuals build a positive credit history, which is crucial for obtaining loans, mortgages, and other financial services.
  4. Emergency Funds: Credit cards can serve as a financial safety net during emergencies, providing immediate access to funds when needed.
  5. Global Acceptance: Credit cards are universally accepted, making them ideal for international travel and online purchases.

Challenges in Credit Card Processing

While credit cards offer numerous advantages, there are also challenges associated with their use. One of the primary concerns is the risk of overspending. With easy access to credit, individuals may accumulate substantial debt if they do not manage their finances responsibly.

Security is another critical issue. Credit card fraud remains a prevalent problem, with global losses reaching an estimated $32 billion in 2021. Financial institutions and payment processors continually invest in enhancing security measures to protect cardholders.

Moreover, high-interest rates on credit card balances can lead to significant financial burdens for those who carry debt from month to month. It's crucial for users to understand the terms and conditions of their credit cards and make informed financial decisions.

The Future of Credit Card Processing

The future of credit card processing is poised for further innovation. The rise of contactless payments and mobile wallets has changed the way we transact. With advancements in technology, we can expect even more seamless and secure payment methods.

Moreover, the ongoing shift towards a cashless society and the integration of cryptocurrencies into payment systems are shaping the financial landscape. While these developments offer exciting possibilities, they also come with challenges that regulators and financial institutions must address.

Top 5 Credit Card Processors:

There are a number of acquirers, but here, we only mention the top credit card processors. However, to make an informed decision, when choosing a credit card processor, consider factors like fees, contract terms, security, and support. Compare processing rates and fees to find a cost-effective solution for your business. Look for transparent pricing without hidden charges. Assess contract terms and flexibility, opting for providers with no long-term commitments. Prioritize security features to protect sensitive customer data. Ensure the processor complies with industry standards, such as PCI DSS and GDPR. Lastly, choose a provider with reliable customer support to address issues promptly. Tailor your choice to your business's unique needs and growth potential, and research and compare multiple options before making a decision.

01. Square:

Square caters to small and medium-sized businesses. They offer a user-friendly point-of-sale system and mobile card readers, making it easy for businesses to accept credit card payments both in-store and online.

02. Stripe:

Stripe is also a popular choice for online businesses, providing a robust platform for processing credit card payments. Their developer-friendly APIs and tools make it easy for businesses to integrate payment processing into their websites and applications.

03. PayPal:

PayPal is one of the top credit card processors known for its versatility. It enables businesses to accept credit card payments online and offers secure payment gateways. It's especially convenient for e-commerce businesses and individuals looking to receive payments.

04. Authorize.Net:

Authorize.Net is a long-standing credit card processing solution that specializes in providing secure payment gateways for online transactions. They offer various features and support for various payment methods, making them a trusted choice for e-commerce businesses.

05. WebPays:

We are a prominent credit card payment processing provider known for our reliable and secure payment solutions. WebPays offers a wide range of services to businesses of all sizes, including payment gateways and merchant accounts. This makes us a top choice for high-risk firms looking for efficient and cost-effective credit card payment processing. We offer APIs, plugins and tools that make it easy for companies to integrate payment solutions into their websites and applications.

Conclusion

In conclusion, credit card payment processing has revolutionized the way we conduct financial transactions. With billions of users worldwide, credit cards have become an essential tool for global commerce. They play a pivotal role in the growth of e-commerce, facilitate international trade, and offer a convenient, secure, and rewarding means of payment. However, it's essential for users to be mindful of the potential pitfalls associated with credit card usage and make informed financial decisions.

As we look to the future, credit card payment processing will continue to evolve, adapting to the changing needs of consumers and businesses. In this ever-evolving financial landscape, the power of plastic money remains a force to be reckoned with. To maximize the potential, businesses should acquire the ideal one from the best credit card processing companies with due diligence. Lastly, we are confident that you will find WebPays a perfect processor for your business in each and every aspect.

"The credit card payment processing landscape is evolving rapidly, driven by technology and the need for secure, convenient payment options." - Mark Wilson, Tech Analyst