Credit Cards Industry Overview
Excerpt from Credit Cards Report
Companies in this industry issue credit cards used by consumers and businesses to purchase goods and services in return for payment in full or in installments. Major companies include American Express, Capital One Financial, Discover Financial, Alliance Data Systems (all based in the US) as well as Credit Saison and Mitsubishi UFJ Nicos (both of Japan), Style Financial (Scotland), and SHC Management (South Korea). Major retailers, banks, and oil and gas companies also issue credit cards.
New payment technologies, including contactless, digital, and mobile payments, are disrupting the lucrative global payments industry and forcing credit card issuers to innovate and form partnerships. Changing consumer preferences and attitudes toward debt present additional challenges to the credit card industry. Hyper-connected, debt-averse millennials -- the largest customer base -- are tending to shun credit cards. Less than a third of millennials say they have a credit card, while more than half of people age 30 to 49 own one and nearly 70% of people over 65 do, according to 2016 Bankrate survey. Younger people are turning instead to companies such as Apple, Amazon, Google, and PayPal, and social platforms that have entered the digital and mobile payment landscapes with products like mobile wallets and wearable devices for making payments at the point-of-sale (POS). The emergence of these potentially competitive networks has primarily been via the online channel with a focus on e-commerce or mobile technologies. PayPal and China's AliPay and WeChat are examples of companies that compete with card issuers in some cases but may also be significant partners and customers.
Products, Operations & Technology
Major products include credit cards for consumers (about 80% of revenue), for merchants (7%), and for businesses and government agencies (6%). Other sources of revenue include other loan products and other financial services. Some credit card companies offer student loans, home loans, travelers cheques, and travel services. Some credit card companies are bank holding companies. Consumer credit cards include general purpose cards (American Express, Discover, MasterCard, or VISA) that can be used to purchase goods and services at a wide variety of merchants. Private-label cards (aka store cards or retail cards) can be used only at a particular merchant or affiliated group of merchants.