SAN FRANCISCO, CA – Commercial spending by American businesses and government entities will continue to expand by an estimated 3.6 percent next year, according to projections from the latest Visa USA Commercial Consumption Expenditure (CCE) index released today.
Business spending is estimated to reach $14.5 trillion by the end of the year, up 4.4 percent or $577 billion from 2003. Visa economists project 3.6 percent growth in 2005 to nearly $15 trillion, with business spending steadily increasing through 2010, when it is expected to reach nearly $18 trillion.
“This latest version of CCE continues to reinforce the significant opportunity to help businesses and government agencies transition from checks to other much more efficient forms of payment,” said Michael Dreyer, senior vice president, commercial solutions, Visa USA. “We know that less than two percent of CCE is currently captured on payment cards. That is why Visa is working with our member banks to help their commercial and government clients best manage their spending to achieve new levels of procurement and payment efficiency by eliminating the costly process of using checks.”
Visa’s CCE index is the first financial metric to standardize how business and government spending is tracked and forecasted within the United States.
Reflecting economic recovery and the continued momentum of its commercial business, Visa also announced it reached a commercial volume milestone, processing $104.7 billion in payments over VisaNet for the first time during the business year ended June 30, 2004.
The recent growth rate of Visa’s commercial payment volume outpaced that of the market segment, posting a 20.4 percent increase in commercial payment volume in 2003.
Visa has produced a compound annual growth rate of nearly 22 percent since 1999, while the market segment itself, as defined by the CCE, experienced a compound annual growth rate of 2.5 percent.
“This is very positive news for our Members, who trust that we have the insight to help them best meet the payment needs of their business clients,” Dreyer said. “One of our top priorities at Visa is to ensure that we have payment solutions that cover the wide spectrum of business purchases, whether the amount is $50 or $5 million.”
Visa’s CCE index was created earlier this year by a team of Visa research and economic experts. Methodology for the CCE index draws on government data in methods similar to the Personal Consumption Expenditure (PCE) index that annually monitors consumer-related spending. By using the same source of measures from the Bureau of Economic Analysis (BEA) and the Census Bureau, including the gross domestic product, CCE offers an unbiased and consistent way to monitor business-to-business expenditures in the United States.
About Visa
Visa is the world’s leading payment brand and largest payment system, enabling banks to provide their consumer and business customers with a wide variety of payment alternatives. Nearly 21,000 financial institutions worldwide rely on Visa’s processing system, VisaNet, to facilitate $2.5 trillion in annual transaction volume with virtually 100-percent reliability. Cardholders in more than 150 countries carry more than 1 billion Visa-branded cards, accepted at millions of locations worldwide. Within the United States, nearly 14,000 financial institutions issue 429 million Visa cards, accounting for more than $1.1 trillion in annual transaction volume. Visa offers a trusted, reliable and convenient way to access and mobilize financial resources – anytime, anywhere, any way. And for business and government agencies, Visa offers trusted, reliable solutions that meet their many commercial payment needs – for virtually any purchase type, any situation or any business process. Plus, Visa delivers comprehensive transaction data such as invoice-related line-item detail and enhanced data on airline, hotel and car rental payments. This data coupled with robust reporting tools, plus other value-added Visa services, help businesses and government agencies streamline operations, reduce overall costs and improve cash flow for better management of their payment processes. Visa’s commercial solutions offer the best way for businesses and the public sector to pay and be paid. For more information about Visa Commercial Solutions, please visit www.visa.com/commercial.
