Card Companies Ready For Holiday Shopping Crunch

One week after Black Friday, Visa USA and MasterCard International are gearing up for an expected surge in transaction volumes during the run-up to the peak shopping period leading up to Christmas.

The busiest day of the year will most likely be Dec. 23 and the busiest hour from 2 to 3 p.m. on Dec. 24, according to MasterCard. Transaction volumes are higher on Christmas Eve when it falls on a Friday, as it does this year.

Other busy days are the two Saturdays before Christmas, Dec. 11 and 18 this year. MasterCard anticipates processing 33 million transactions each Saturday. That's nearly a million more than on the day after Thanksgiving, known as "Black Friday" because retailers traditionally achieve profitability for the year that day.

Visa is expecting a 15% to 17% increase in transaction volume for the holiday season. Last year Visa's transaction-processing system hit a peak of 6,200 transaction messages per second on Christmas Eve.

Spending over the Black Friday weekend was $22.8 billion, according to the National Retail Foundation. Nearly a third (29.3%) of consumers did at least some of their shopping online, the organization said. Still, no one can predict exactly how the holiday shopping season will pan out based on Black Friday alone. "The holiday season is not a sprint, it's a marathon," an NRF spokesman says.

Visa processed 397 million card transactions in the United States in the week ended Nov. 28, up 18.2% over the same period in 2003. E-commerce transactions were 24.7 million, up 22% from 2003. MasterCard didn't disclose transaction volumes.

Visa and MasterCard plan for an increase in peak transaction volumes on the order of 15% to 20% annually. MasterCard's authorization system, Banknet, is a peer-to-peer system "with the ability to burst to an expanded capacity" to meet peak loads, says Mike Manchisi, senior VP at MasterCard. The capacity-planning process for the new year begins early: As soon as this year's holiday season ends, the company will meet with card-issuing banks to gauge their outlook for next year. "We don't want to be surprised, so we always plan for more," Manchisi says.

This summer Visa tested its authorization system at a maximum load of 8,200 transaction messages per second, says Rick Knight, senior VP of operations for Inovant, Visa's processing subsidiary. In October, it made one of its largest system upgrades ever, including the addition of a Web-based tool for speeding dispute resolutions.