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 Alliance Data Systems, American Express, Capital One Financial, and Discover Financial (all based in the US), as well as Credit Saison and Mitsubishi UFJ Nicos (both of Japan), Style Financial (Scotland), SHC Management (South Korea), and UnionPay (China). Major retailers, banks, and oil and gas companies also issue credit cards.
The number of credit cards in circulation exceeds 635 million in the US and 1 billion worldwide, according to CreditCards.com. Just 10 nations account for more than 80% of global credit card issuing revenue, according to consulting firm McKinsey & Co. The US and Brazil are the largest by revenue, accounting for more than half of global revenue. Other major markets include Japan, Canada, the UK, and South Korea.
The US credit card industry includes about 570 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $90 billion.
Financial transaction processors, such as MasterCard and Visa, provide transaction services for companies that issue credit cards and to merchants that accept credit card payments. That industry is discussed in a separate profile. Many card issuers use the MasterCard and Visa brands.
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.
Demand is driven by consumer spending, business investment activity, and interest rates. The profitability of individual companies depends on their ability to collect fees and interest in addition to balancing credit risk and attracting new customers. Large companies have advantages in economies of scale by securing access to capital, and they can offer a variety of products to a broad customer base. Smaller companies can compete by offering specialized products or through technological advances such as web-based payment platforms. The US industry is highly concentrated: the four largest firms account for more than 75% of revenue.
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
Sales & Marketing
Finance & Regulation
Regional & International Issues
Also includes the following chapters:
Quarterly Industry Update
Trends and Opportunities
Call Preparation Questions
Glossary of Acronyms