Visa Data Points to Good Holiday Shopping Season; Service Sectors, Personal Multi-Media Expected to be the Most Popular Retail Segments During 2005 Holiday Season; Energy Costs are Wildcard in the Spending Equation

Business Wire, Oct 27, 2005

SAN FRANCISCO -- Visa USA, the world's leading payment brand and largest payment system, today announced retail predictions for the 2005 holiday season. Despite recent natural disasters and increasing energy costs, Visa USA's economist, Wayne Best, predicts that the 2005 holiday season in the United States will be moderate to strong, particularly as wage and income growth is expected to continue through the end of the year.

"Currently, our economy is on good footing and should remain steady in the coming months. As consumers continue to feel good about their financial situations, bolstered by sustained wage and income growth, it should translate into a good holiday season for retailers," said Wayne Best, senior vice president of business and economic analysis for Visa USA. "Much will depend on whether Americans will see fuel and oil prices start to level off - or even decrease - giving consumers access to more disposable income, in time for the holidays."

Based on data from Visa's SpendTrak report, Best adds, "Americans are looking for value and have become increasingly savvy at finding a good deal on the Internet or at traditional retail outlets. This is especially true when it comes to holiday travel - consumers are looking for, and booking, their holiday transportation a lot earlier this year."

Possible trends that Best has identified for this holiday season include:

--Increased Financial Security: More Americans are returning to work as supported by the drop in unemployment rates which is lower today than one year ago, creating job security and momentum for retail consumption. The economy is experiencing solid wage and salary growth (nominal pre-tax wages and salaries) of five to six percent, which indicates a probable rebound in consumer confidence and ability to spend.

--Everyday Value Shoppers: Retailers may have thought consumers were savvy last year, but this holiday season, shoppers will likely operate on the fundamental principle of finding a good deal that can translate into everyday life - whether purchasing online or at a traditional "brick and mortar" retailer.

--Travel and Tourism: Despite recent airline news, travel continues to be a high-activity segment. More travelers are purchasing their holiday transportation needs early, particularly in the airline and travel package industries.

--Experiential Gifts: Previous years brought the advent - and subsequent popularity of - personal entertainment devices, such as digital video recorders and MP3 players; the 2005 holiday season could see consumption shift away from purchasing the actual products and devices, indicating a growth in personal multi-media entertainment and services.

Throughout the 2005 holiday season, Visa USA will continue to provide real-time insight into consumer spending behavior by issuing its weekly SpendTrak report. Based on proprietary data, SpendTrak presents timely statistics based on approved authorizations and settlement of Visa branded credit, debit and commercials cards in key market segments - Discount/Mass/Drug Stores, Department Stores/Apparel, Specialty Retail/Hobby, Home and Garden, Personal Entertainment, Mail and Phone Orders, e-Commerce and Travel and Entertainment.

SpendTrak proved to be an accurate, timely and reliable economic indicator for the 2004 holiday period (November 1 - January 2), with data reflecting retailers' strong and steady growth prior to and during the shopping season, and other strong areas of consumer purchasing mindset and behavior.

SpendTrak also demonstrated that cardholders were switching in larger numbers from paper forms of payment like cash and checks, to electronic payments such as credit, debit and prepaid cards.

A new SpendTrak report will be available weekly each Monday from November 7, 2005 through January 2, 2006, with full reports and updates on retail trends, average ticket spend and category growth.

About Visa USA Holiday SpendTrak Reports

The Visa USA Holiday SpendTrak reports provide insights into consumer spending behavior. Based on proprietary data, this report presents timely statistics based on approved authorizations of Visa branded credit, debit and commercials cards in key market segments and includes specific data for key retail categories. Prepaid card spending (i.e. gift card) is reflected in the debit card numbers. Growth comparisons are to the same period from the prior year.

Growth in Visa volume reflected in the SpendTrak report is the result of two major factors: increased spending by consumers and business; and the overall migration of spending from paper forms of payment (cash and checks) to electronic forms (Visa).

About Visa

Visa USA is the nation's leading payment brand and largest payment system, enabling banks to provide their consumers and business customers with a wide variety of payment alternatives tailored to meet their evolving needs. Visa USA is committed to increasing the choice, convenience, acceptance, and security of Visa payments for all stakeholders in the payment system - Members, cardholders and merchants. Through its 14,000 Member financial institutions, more than 482 million Visa-branded cards have been issued to cardholders in the United States. Last year, U.S.-based financial institutions relied on Visa's processing system, VisaNet, to facilitate $1.3 trillion in transactions with unparalleled reliability.