The economy may be crawling back to normal in some sectors, but credit card industry revenue continues to fall, according to one longtime observer.

One big problem is that consumers have turned away en masse from using credit cards, causing their revolving debt to decline over the past two years.

But even if borrowing picks up, card issuers still will need a way to make up lost revenue after rules associated with the Credit Card Accountability, Responsibility and Disclosure Act that went into effect nearly two years ago restrict their ability to preemptively raise interest rates on risky cardholders.

Total revenue for the credit card industry was $154.9 billion, down 5.5% from $163.9 a year earlier, Thousand Oaks, Calif.-based credit card advisory firm R.K. Hammer reported Jan. 3. Hammer’s analysis combines the estimated revenues of all U.S.-issued general-purpose and private-label credit cards.

The ongoing pressures to offset lower revenues are prompting issuers to consider reducing expenses further through fresh rounds of staff cuts and possibly by outsourcing more positions offshore, Robert Hammer, the firm’s chairman and CEO, tells PaymentsSource, a Collections & Credit Risk sister publication.

“Consumers are spending less, revolving less and being more cautious, which has driven down total receivables and hurt revenues,” Hammer says. “That leaves the expense line as one of the few things issuers can control, which inevitably means staff cuts.”

Few of the major card issuers are adding staff, and many recently have outsourced more positions to Singapore, Brazil and India, Hammer says.

“We’re forecasting about 160,000 bankers will lose their jobs this year as banks cut costs, and a good number of those will be in the credit card area,” Hammer says.

Issuers will try to use technology to handle more card risk-management and operations tasks, he suggests.

“Technology investments are continuing because issuers have to keep up with competitors, and wherever possible they are automating card-related functions,” Hammer says.

Certain card issuers in 2011 bucked the negative trend with marked improvements in revenue, but they did so primarily through acquisitions that propelled growth “as opposed to more traditional ‘organic’ growth,” he says.

And the average charge-off rate on outstanding receivables declined steadily throughout last year to the 6% range from a high above 11% in 2010, which has helped stem losses, Hammer notes.

But for some issuers, charge-offs remain stubbornly higher than average, “closer to 8%, which is still too high,” he says.

One bright spot for credit card issuers could be the Federal Reserve Board’s cap on debit card interchange that went into effect Oct. 1.

“We’re now seeing a trend toward more credit use,” Hammer suggests, though his firm did not provide data to support such a shift.

Certain card issuers are “doing a better job” of marketing cards through more-targeted solicitations compared with four years ago, Hammer says.

As a result, “as the economy improves, we may see modest improvements in consumer spending and card use, and certain issuers that have remained on top of the game may start to see some better revenues this year.”

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