• Users (primarily retailers) will spend well over $650 million in 1985 to utilize consumer credit card authorization and check verification/guarantee information services, as shown in Exhibit III-2. These expenditures are considered a normal cost of doing business and a consumer convenience to secure revenues and hopefully, profitability (by eliminating bad debt).

• Retailers spend a great deal more on credit card operations, including transaction processing and clearance, than is spent on check verification/guarantee. However, expenditures for credit card authorization are about equal to expenditures for check verification/guarantee.

Credit card authorization transaction volume of 1.5 billion in 1985 vastly exceeds check verification/guarantee volume of over 150 million.

Expenditures for underwriting credit card losses are bundled with transaction processing and clearance and settlement expenditures, and are distributed among participating financial institutions.

User expenditures for check guarantee include direct underwriting fees by the services vendor based on, among other parameters, the check amount.

• The volume of credit card transactions is growing less than 5% annually. Fraud is exploding, however. The growth of credit card authorization volume (at least 14% annually) results from a proliferation of electronic authorizations from POS and ECR terminals in the retail environment. Increasing the number of terminals in turn increases the portion of total credit card transactions which are authorized.