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The success or failure of the mobile payment industry may depend on the U.S. version's ability to emulate Japan in 2011, according to a report from Javelin Strategy and Research. Overseas, taking on credit card debt using a mobilephone has become the norm, and companies must reassure consumers that this system is secure effective.

"In Japan, mobile wallets play a broad role in consumers' lives," said Beth Robertson, Javelin director of payments research. "An individual's mobile phone might contain their airline boarding pass, help track their loyalty programs, unlock their home, pay for a taxi or soda out of a vending machine and be used to purchase items at a store."

Javelin found that nearly half of consumers are hesitant to take on credit card debt in this way over concerns for the security of the transaction, the report said. However, one-third iPhone users say they are likely or very likely to try it.

A number of companies have tested systems that allow consumers to take on credit card debt using their smartphones in the last few months.

The nation's six largest credit card lenders – American Express, Bank of America, Capital One, Chase, Citibank and Discover – all saw the rate at which they had to write off consumers' seriously delinquent credit card debt as being uncollectable slip to year-long lows, according to a report from The Associated Press. However, despite the lows, rates are still considerably higher than historical averages and pre-recession levels.

Federal Reserve data showed that the rate of defaulted credit card debt peaked in the second quarter of 2010 at 10.37 percent of all balances, the report said. In the two years prior to the recession, though, it averaged just 3.82 percent.

"There are some good improvements," Mike Dean, a managing director with industry tracking firm Fitch Ratings, told the news agency. "We've seen some better numbers there, but nothing to say, 'Wow!'"

The rate at which consumers' credit card debt is stricken from lender records is expected to continue to improve into the future as well, the report said. However, the national unemployment rate, which is still hovering around 10 percent could still hinder more substantial improvements until it begins to come down more significantly.

Currently, many industry experts believe that the lower charge off rates are due to two factors, the report said. First, consumers are being more careful in dealing with their credit cards in general, spending less and cutting into balances with higher payments. However, the default rates are also likely the result of many consumers who have already experienced financial troubles in the past and are now unable to obtain new lines of credit. As a result of these two considerations, lenders are only allowing the most trustworthy consumers to maintain accounts, ensuring fewer losses. In all, some 8 million consumers discontinued their use of credit card accounts in 2010 for one reason or another.

In the past, rates of default and delinquency moved more or less in concert with fluctuations in the nationwide unemployment rate, but since the recession began, the latter figure has plateaued while the former two have declined.

Citi saw its rate of charge offs – credit card debt that has fallen so behind in payments they're deemed uncollectable – slip significantly in December, to 8.34 percent, according to a report from The Associated Press. That was a 22-month low, and down from 9.4 percent observed in November. The lender's peak default rate came in August 2009, when it was 12.14 percent.

Meanwhile, delinquencies – credit card debt 35 or more days past due – declined as well, to 4.44 percent from 4.71 percent in December, the report said. This was the lowest rate seen in over two years.

Consumers have made a greater effort to reduce their credit card debt in recent months, but the large declines in delinquency and default has also been attributed to fewer troubled borrowers having access to lines of credit.

Prepaid debit cards have become a popular gift for holiday shoppers, and a frequently-used payment option among consumers who either can't or don't want to deal with the hassles of credit card debt. But the fees that are typically associated with these accounts can also cause headaches, according to a report from USA Today. Prepaid cards can carry fees for monthly maintenance, activation, ATM withdrawals and more, quickly leaving some consumers with a negative balance in just a few months if they don't use them right away.

Still, these cards are among the most popular and fastest-growing payment options available, the report said. A MasterCard study on the future of these accounts found it could top $440 billion by 2017, four times higher than the total in 2009.

But the growing popularity of prepaid debit cards has also drawn attention to the associated fees, the report said. A number of consumer groups and lawmakers have recently spoken out against the charges these cards can incur, and noted that they don't offer the same protections against fraud and loss that accounts from banks do. A number of U.S. senators have also voiced opinions, as one introduced legislation to rein in some of the fees, and another called for these accounts to be regulated by the Consumer Financial Protection Agency.

Currently, law mandates that some fees be displayed on the card's packaging, the report said. However, for the full list, cardholders will have to visit a website. Further, the listed charges are often difficult to find.

Companies that issue the cards, however, contend even with the charges, they are less costly than dealing with credit card debt and bank accounts, the report said. In addition, the popularity of the cards has led to more competition from issuers, and driven the cost of the fees down considerably.

These cards have become particularly popular with underbanked consumers who may have had trouble with credit card debt in the past and are now unable to obtain new accounts. 

Capital One Financial had fewer instances of charge offs and delinquency in December as consumers continued to improve their finances and get a better handle on their credit card debt, according to the company's monthly regulatory filing.

The company saw charge offs – credit card debt so late on payments that the company writes it off as uncollectable – decrease considerably, dipping to 7.01 percent in December from 7.56 percent the previous month. Meanwhile, its delinquency rate – accounts 30 or more days behind – fell to 4.09 percent from November's 4.26 percent.

Capital One is typically the first major lender to release information about its borrowers' delinquent and defaulted credit card debt every month. Like most issuers, it has seen these rates decline significantly over the last several months as consumers had a better time dealing with their finances.

Just 51 percent of consumers now say that paying off all of their credit card debt is a priority, according to the latest biannual BAI and Finacle Index of Bank Sentiment. That's down from the 53 percent who responded similarly in the same poll last year, but up from the August 2009 low of just 48 percent.

Overall, 55 percent of consumers said they wanted to reduce at least some of their credit card debt, the survey found. Meanwhile, just 45 percent said they were able to put money into savings every month, down 6 percent from last year.

"These shifts may be due to the fact consumers have less confidence in their personal financial situation, causing them to focus on meeting current financial demands rather than planning and saving for the future," said Ajay Nagarkatte, managing director of BAI Research.

Consumers have already made a strong effort to reduce their existing credit card debt, and were facing fewer charge offs in the latter half of the year as a result.

Millions of consumers stopped using their credit cards altogether in 2010, though a portion of that was due to some being unable to pay their credit card debt at all, according to a report from the Minneapolis Star-Tribune. In all, the number of Americans with at least one credit card dipped to 62 million last year, down from 70 million in 2009.

Instead of taking on credit card debt to make everyday purchases, most who no longer have these accounts rely largely on debit instead, the report said. This option offers most of the same features as credit, such as the ability to make purchases online, and may also have fewer fees associated with it.

However, there are headaches associated with debit as well, the report said. Some companies, such as rental services or hotels, may charge hundreds of dollars to the cards at the time of purchase, as a means of securing their property in case of damage. But that may change with the new consumer focus on using these cards.

The overall shift to the use of debit is similar to the way credit cards gained popularity in the late 1980s, the report said. At that time, lenders sent out millions of preapproved cards to consumers. But since the current recession set in, they've effectively done the opposite, revoking many checking accounts over delinquent and defaulted credit card debt.

"When an account gets charged off, what normally happens is that the account is closed," Darryl Dahlheimer, program director for Lutheran Social Service Financial Counseling Service in the Twin Cities, told the newspaper. "It's an involuntarily thing on the part of the card-holder. Nobody wants that to happen because it's a big black mark on your credit report, you lose your credit cards and you're still liable for the debt."

Overall, most major lenders have seen their rates of defaulted and delinquent credit card debt decline over the last several months as consumers made a greater effort to improve their credit health and reduce their balances. This in turn has lead to higher profits in the industry.

JPMorgan Chase enjoyed a profit of $4.8 billion in the fourth quarter of 2010 behind better performance for its credit card debt division, the company recently announced. This marked an increase of 47 percent over the same quarter in the previous year.

In addition, consumers seemed less wary of taking on credit card debt than they were last year, the report said. In the entire 2010 calendar year, the company saw Americans open 11.3 million new accounts and fourth-quarter sales volumes crept up 9 percent.

"We provided credit to and raised capital for our clients of more than $1.4 trillion during the year," said JPMorgan chief executive officer Jamie Dimon. "These efforts included more than $10 billion of credit provided to over 250,000 small businesses in the U.S. in support of our communities, an increase of more than 50 percent over 2009."

Consumers nationwide have been able to pay down their credit card debt more frequently this year, allowing lenders to avoid lost revenue due to charge offs.

The number of cases in which consumers have been sued over seriously late credit card debt is on the rise again, according to a report from the San Jose Mercury News. In particular, these cases often come from debt collections agencies, which are taking advantage of automated systems to process a greater number of lawsuits.

However, lenders are less likely to file suits even as the numbers have increased for most companies, the report said. Instead, they try to work with troubled consumers to sort out defaulted credit card debt through lower interest rates or extended deadlines.

"We use litigation on a select basis," Chase Card Services spokesman Paul Hartwick told the newspaper. "Credit-card losses and delinquency rates have been at or above historically high levels, and that has resulted in a higher number of debt collection lawsuits."

Most debt collections agencies will purchase severely delinquent credit card debt from lenders who believe the balance is uncollectable, and aggressively pursue even a portion of it from the financially troubled consumer to turn a profit.