Credit card issuers are currently going through the most turbulent times since the introduction of credit cards. U.S. Congress is looking to reshape (and possibly eliminate) their fee income and prevent them from increasing interest rates on existing balances, while merchants are lobbying to cap interchange rates.
To make matters worse, the current economic situation is causing a sharp reduction in credit card transaction growth, limiting issuers’ interchange income. It’s also keeping credit card issuers from extending credit to risky consumers,which further curtails interest rates and interchange revenue.
In addition to these macroeconomic challenges, credit card issuers must still
wrestle with day-to-day issues, such as new customer acquisition, card activation, customer retention and card usage.
In October 2008, Aite Group surveyed 12 U.S. credit card issuers to understand
the state of credit card issuing (see Figure 1). This report looks at the challenges credit card issuers face, and their strategies for acquiring new customers, retaining their current ones, and achieving higher activation rates. We’ll also look at the relationships issuers have with card networks and vendors.
TABLE OF CONTEN TS
IMPACT POINTS
INTRODUCTION
MARKET OVERVIEW
TOP CHALLENGES
CUSTOMER ACQUISITION
ACTIVATION AND ATTRITION
PRODUCT DEVELOPMENT
MISSED OPPORTUNITIES?
NETWORKS
CRITERIA FOR CHOOSING NETWORKS
ISSUERS’ PERCEPTION OF CARD NETWORKS
NETWORK PREFERENCES
PROCESSORS AND VENDORS
CONCLUSION
RELATED AITE GROUP RESEARCH
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PDF Ebook Overcoming Challenges of Credit Card Issuing
