Bob Dylan sang, "the times, they are a changin." While the original sentiment referred to the state of American politics, it is relevant to today's Transaction Processing (TP) industry as well. New technologies are advancing our global economy from paper and coins to clicks and swipes.

The use of TP technologies is on the rise in spite of recent security and privacy breaches. In fact, more than 668 million credit cards and 235 million debit cards are currently in the marketplace. And for the first time, debit cards were used more than credit cards. More than 3.1 billion debits took place in Q1, surpassing the 2.97 billion credit card purchases. And with "stored value card" (SVC) programs on the horizon, cash is closer to becoming obsolete. So let's get a handle on the state of "credit versus debit" and peek into the future of TP.

Banks encourage electronic transactions because it lowers the cost of doing business. The rise of TP technologies reduces the need for a physical bank and its accompanying overhead. In addition, banks can charge customers for each use of their debit or credit card through a monthly or per swipe fee. As debit and credit cards become more prevalent, banks are likely to reach into consumers' pockets even more, increasing fees or the frequency of charges, just like with ATMs.

The latest developments in TP will move us away from cash even more rapidly. TowerGroup financial services research company projects the industry will nearly double within the next few years. The sales of SVCs are expected to jump from $45 billion in 2003 to $90 billion by 2007.

Retailers and financial institutions both offer SVCs. Retail-issued cards are restricted to the purchase of products, goods and services available online or in that store, and expire once the money associated with the value of the card is used up. Cards from financial service companies like American Express, Visa, MasterCard, etc., are used like credit cards and fall under their rules. Unlike traditional credit cards however, spending is limited to the amount of money the consumer prepays, and purchases are deducted from the balance after each swipe.

Employers are increasingly using SVCs to compensate their workforce, placing $2.1 billion on benefit cards in 2004 - up 12 percent from the year before. These programs are changing the way businesses run: Flexible Spending Accounts; "bonus" or incentive programs; healthcare; transit subsidies; and gas allowances boost morale, employee job satisfaction and cut cost and paperwork for employers.

Flexible Spending Accounts (FSAs) reduce both the employer and employees' federal taxes because taxable income drops by a dollar, for every dollar a worker sets aside. The accounts can be used to pay for medical procedures, doctor's visits and medicines. FSA spending tripled to more than $855 million in 2004.