Direct Marketing, Mail Order, and E-commerce News from the National Mail Order Association


Visa USA Forecasts Small Business Spending to be $4.7 Trillion This Year,
Growing to $5.3 Trillion in 2008

Visa USA today introduced its small business spending forecast and segmentation
analysis, providing a long-range and comprehensive view into the future growth of
small business spending in the United States. This analysis, part of Visa's broader
Commercial Consumption Expenditure(TM) (CCE) initiative, is the latest in a
series of analytical activities to further understand business payment needs.

The small business segment - businesses with under $25 million in annual sales -
accounts for one-third of all expenditures by businesses in the United States.
According to Visa's CCE analysis, non-payroll spending by U.S. small
businesses will increase an estimated 5.4 percent this year to $4.7 trillion, and
expand further to reach $5.3 trillion in 2008.

"This study, illustrating how and where small businesses spend, helps Visa and
our Members better understand and anticipate the growing payment and
information needs of this segment," said David Cramer, senior vice president,
commercial solutions, Visa USA. "Small business spending already represents
a significant percentage of all commercial expenditures - and is on the rise.
Collectively, we have an opportunity to help streamline their financial processes
and improve payment efficiency."

Core Business Services Top Small Business Expenditures

The largest share of small business expenditures (34 percent) is comprised of
core business services, such as legal, accounting, insurance and shipping and
mailing. Spending on these core services, which also include other professional
services such as consulting, as well as temporary services, is expected to grow
5.7 percent in 2005 to $1.6 trillion.

Other key components of the forecast include:

-- Rent (currently 8 percent of small business spending) is anticipated to exceed
$400 billion in 2005 and continue to grow at a double digit rate over the next three years.

-- Advertising and marketing is expected to reach nearly $250 billion in 2005 and
see a compound annual growth rate of approximately 9 percent over the next three years.

-- Small businesses will spend $1.1 trillion, or 23 percent of all expenditures,
on maintenance and operating supplies, including utilities, telecommunications
services, computers and data processing, and office supplies in 2005.

-- Travel and entertainment costs, such as airline travel, auto rental and lodging,
represent nearly $100 billion of small business expenditures, and are expected to
grow at nearly 6 percent per year over the next three years.

-- Raw materials and manufactured goods spending will increase to $800 billion
in 2005, representing 18 percent of small business expenditures.

-- Other spending categories, including capital equipment and all other non-payroll
expenses, are expected to reach more than $400 billion in 2005.

"With the introduction of our small business spending forecast, Visa continues to
make industry-defining contributions to frame and measure major economic trends,"
said Wayne Best, senior vice president, interchange strategies, Visa USA. "This
expansion of Visa's CCE metric comes at a time when it is more important than
ever to recognize and track the commercial payment opportunity, as small
businesses transition to more efficient forms of payment."

Visa plans to update its CCE small business spending forecast on an annual basis.

Small Business Spending Trends

Since 2000, spending on small business general-purpose cards has grown by 20
percent annually, while volume on Visa's small business products has increased by
33 percent per year during the same time period. The explanation for this
industry-leading growth lies in Visa's focus on tailoring its programs to address
the payment and cash flow needs of small businesses by offering versatile payment
products and services.

"Trends indicate that more and more businesses are moving away from checks as
a form of payment and are looking to utilize credit or debit card options in their
operations," Cramer said. "Visa and its Member financial institutions remain
committed to meeting the unique needs of the small business segment and will
continue to develop products that align these business priorities."

About Visa Commercial Consumption Expenditure

Visa's Commercial Consumption Expenditure (CCE) index is the first financial
metric to standardize how business and government spending is tracked within the
United States. Created by a team of Visa research and economic experts, CCE
draws on government data in methods similar to the Personal Consumption
Expenditure (PCE) index, which annually monitors consumer-related spending.
By using measures from the Bureau of Economic Analysis and the Census Bureau,
CCE offers an unbiased and consistent way to monitor business expenditures
within the United States that is consistent with gross domestic product accounting.

CCE is comprised of four key data elements including intermediate inputs, wholesale
and retail purchases, private fixed investment and government spending. The small
business spending forecast incorporates the broader CCE data set, as well as
proprietary data provided by Global Insight.

About Visa Commercial Solutions

Visa offers small businesses, middle market companies, large corporations and government agencies trusted, reliable solutions that meet their many commercial payment needs - for virtually any purchase type, any situation or any business process. These capabilities 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 Business products and services, please visit

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 one billion Visa-branded cards, accepted at millions of locations worldwide. Within the United States, nearly 14,000 financial institutions issue 453 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.

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