Credit Cards
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, Bread Financial, Capital One Financial, and Discover Financial (all based in the US), as well as Credit Saison and Mitsubishi UFJ NICOS (both of Japan), and UnionPay (China). Major retailers, banks, and oil and gas companies also issue credit cards.
The number of credit cards in circulation worldwide is more than 25 billion and is expected to reach about 30 billion by 2027, according to Statista. While credit cards in circulation in the US is about 365 million, according to CreditCards.com. Global payments revenues are likely to rise year-on-year by nearly 9.5% in 2022 and ride a positive trajectory for the next decade, according to a new report by Boston Consulting Group (BCG).
The US credit card industry includes about 660 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $130 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.
Competitive Landscape
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. Baby boomers and Generation X carried an average of 4 to 5 credit cards, while millenials and the Generation Z carried 2-3 credit cards, according to Creditcards.com. 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 50% of revenue.
Products, Operations & Technology
Major services include credit card services for cardholders and consumers which account for more than 95% of the industry revenue, followed by other products
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Regional & International Issues
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Also includes the following chapters:
Quarterly Industry Update
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Industry Indicators
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Business Challenges
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Trends and Opportunities
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Call Preparation Questions
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Financial Information
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Industry Forecast
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Industry Websites
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Glossary of Acronyms