By Roy Urrico
Finopotamus aims to highlight white papers, surveys and reports that provide a glimpse into what is taking place and/or impacting credit unions and other organizations in the financial services industry.
Mounting consumer debt, intense market competition and evolving fraud threats highlight Experian’s 2025 State of Credit Card report. Because the credit card industry is rapidly changing, the strategies of financial institutions and other business involved in the credit card industry needs to keep pace.
Besides in-depth analysis of the credit card landscape, the study offers key insights to help tackle challenges and uncover opportunities for growth. One observation: “Despite signs of cooling inflation, prices of everyday goods and services remain elevated. Consumers are feeling the pinch, leaning heavily on credit cards to get by. While some can comfortably pay off their balances each month, many are struggling to manage their payments.”
Market Overview
“Credit card usage, regulatory updates, market competition, expectations for the customer experience, and fraud and identity challenges are continuing to shape the card industry,” said the report.
Key takeaways include:
Credit Use. Higher costs for goods and services have prompted consumers to rely more on credit cards. Credit card debt reached an all-time high of $1.17 trillion in the third quarter of 2021. Delinquency rates remain elevated at 8.8%, though down by 0.3% from the second quarter of the same year. “Although credit card balances have increased, acquisition has slowed down, particularly among Gen Z consumers.”
Regulatory Considerations. According to the Consumer Financial Protection Bureau (CFPB), credit card late fees cost Americans around $14 billion every year. “The agency issued a final rule in March to lower the immunity provision dollar amount for late fees to $8 and eliminate the automatic annual inflation adjustment,” said the report. Additionally, the CFPB finalized a rule that requires a covered entity to make consumers’ financial data available for them to share with other entities upon request.
Market Competition. Buy now, pay later (BNPL) products are continuing to gain significant traction, especially among younger consumers. According to Experian, consumers are also increasingly relying on contactless payments and mobile wallets — 53% of Americans say they use digital wallets more frequently than traditional payment methods. To stay top-of-wallet, traditional card issuers are introducing new products, features and innovations.
Customer Experience. Consumers expect seamless experiences across platforms, channels and devices. “In fact, 88% of consumers are likely to leave an application if they encounter significant friction during the user experience.”
Fraud And Identity. Experian reported in 2023, 52 million Americans had fraudulent charges on their credit or debit cards, with unauthorized purchases exceeding $5 billion. “Unsurprisingly, consumers are increasingly wary of fraud, ranking identity theft (84%) and stolen credit card information (80%) among their top online security concerns.
Open Banking Drives Innovation and Technology
“Open banking is revolutionizing the financial services industry, fostering a more inclusive, transparent and consumer-empowered ecosystem. With over 100 million consumers deemed unscorable, invisible, or subprime by traditional credit standards, this model can significantly reduce barriers to financial inclusion,” offered the 2025 State of Credit Card report.
Experian defined open banking as “the practice of securely sharing consumer-permissioned financial data between banks or third-party providers” using application programming interfaces (APIs).
The benefits of open banking, according to the report, include:
Consumers can choose financial providers with which they share their data.
When the consumer democratizes their data, they may have access to a greater array of offerings.
Insights from shared data will spur greater competition to acquire or retain consumers, leading to the development of more personalized products and services.
Shared ecosystems based upon data require participants to maintain data standards, reduces variation in quality.
With more common and stable data, processing methods will improve and cycle times to process payments will decrease.
“An open banking ecosystem has a quality of inclusion with data aggregators, financial institutions, and participants with financial products and services,” shared Experian. “Although 70% of consumers have reported that they are likely to share banking data, concern may arise for groups that do not actively participate in banking their finances. While banking participants accelerate forward with offerings and management of their money, the unbanked and underbanked populations show little movement.”
Fraud And Identity Management
The report observed fraudsters are becoming more sophisticated — their tactics evolving in both scale and complexity. Leveraging technological advancements like generative artificial intelligence (GenAI), they can now bypass even the most trusted fraud prevention tools, leaving businesses and consumers more vulnerable than ever.
Behavioral analytics is one of the ultimate defenses against escalating fraud attacks. Unlike traditional tools that rely on personally identifiable information (PII) — data that can be easily compromised — it analyzes distinct actions and patterns, such as typing speed, field entries and cursor movements, to accurately detect fraud from the outset. It also works passively in the background, enabling financial institutions to distinguish between genuine users and malicious actors without disrupting the customer experience.
The report listed five threat examples:
GenAI was the No. 1 stress point identified by fraud teams in 2024.
Automated account takeover (ATO) attacks rose by 10% in 2023.
Bot-led fraud attacks doubled from January to June 2024.
U.S. adults lost a total of $43 billion to identity fraud in 2023.
Fifty-one percent of financial institutions reported that false positives have hampered the customer experience. False positives, which could involve opening a new account or authorizing an existing one, is when a legitimate customer is erroneously identified as a suspected fraudster.
Behavioral analytics, according to Experian, can adapt to evolving fraud threats, closing the gap between new fraud vectors and fraud loss. “Paired with device and network intelligence, which includes insights into a user’s IP address and device type, providers can further enhance their fraud prevention strategies, resulting in earlier fraud detection, reduced manual reviews, and a seamless customer experience.”