Barclaycard has long been the market leader in the UK credit card market. The document discusses Barclaycard's history and milestones, including being the first to launch credit cards in the UK. It then focuses on strategic options for Barclaycard to maintain its advantageous position amid significant changes in the fast-moving industry, including new technologies and increased regulations. The case study evaluates different strategic paths for Barclaycard to consider to remain a leader in the future.
The document provides an overview of the credit card industry, including key participants such as issuers, acquirers, customers, and networks. It describes the transaction process and business model, which relies on securitization of receivables. It also lists the top credit card vendors and provides metrics on industry size, fraud levels, and types of cards. Emerging technologies like smart cards and debit cards are discussed as potential disruptors to the established industry.
The document provides an overview of the card industry and payment technologies. It discusses the history of payment cards from early metal cards in the 1910s-1920s to the development of major credit card networks like Visa and Mastercard in the 1960s-1970s. It also outlines the different types of players in the industry like issuing banks, acquiring banks, processors, and card associations. Additionally, it examines the various types of cards used today such as credit, debit, stored-value, and smart cards. The document aims to educate about the card industry landscape and how money is made through interchange fees.
1) Plastic cards have seen little innovation over decades, but new trends are emerging like mobile payments, rewards programs, and alternative payment providers that threaten issuer relationships.
2) Mobile payments are transforming transactions into interactions through real-time offers, loyalty programs, and mobile acceptance by small businesses. However, issuers must compete with alternative providers like PayPal.
3) Hybrid cards that combine credit and debit on one plastic are being tested but have not seen wide adoption. Mobile payments are drawing more innovation and investment currently. Chip cards adding security layers may become more commonplace for international travelers.
This document summarizes trends in the prepaid card industry, focusing on Green Dot and NetSpend as leaders. While both companies' stocks have struggled, they have continued growing revenue significantly through 2011. Green Dot relies on retail partnerships like Walmart for distribution, while NetSpend partners with check cashers and payday lenders. Both companies face challenges from increased competition from retail banks entering prepaid cards, as well as from American Express and partnerships like Kroger/U.S. Bank. Overall regulation is also increasing for the prepaid industry.
A Review of the Data Broker Collection, Use,and Sale of Consumer Data- Mark - Fullbright
company names mentioned herein are for identification and educational purposes only and are the property of, and may be trademarks of, their respective owners.
The European Commission initiated an antitrust case against MasterCard and Visa regarding their interchange fees. Interchange fees are payments from acquiring banks to issuing banks that occur during card transactions. The Commission argued these multilateral interchange fees amounted to price fixing that harmed merchants. As a result, MasterCard and Visa made commitments to reduce interchange fees. However, economists argue interchange fees play an important role in payment systems by incentivizing banks. The case raises questions about whether regulation has improved efficiency and if further action is needed regarding interchange fees and potential market failures in the payment system.
The global cards market was valued at over $250 billion in 2017. North America was the largest region in the cards market in 2017, accounting for around 60% of the global market.
Read report; https://www.thebusinessresearchcompany.com/report/cards-global-market-report-2018
The document provides an overview of the credit card industry, including key participants such as issuers, acquirers, customers, and networks. It describes the transaction process and business model, which relies on securitization of receivables. It also lists the top credit card vendors and provides metrics on industry size, fraud levels, and types of cards. Emerging technologies like smart cards and debit cards are discussed as potential disruptors to the established industry.
The document provides an overview of the card industry and payment technologies. It discusses the history of payment cards from early metal cards in the 1910s-1920s to the development of major credit card networks like Visa and Mastercard in the 1960s-1970s. It also outlines the different types of players in the industry like issuing banks, acquiring banks, processors, and card associations. Additionally, it examines the various types of cards used today such as credit, debit, stored-value, and smart cards. The document aims to educate about the card industry landscape and how money is made through interchange fees.
1) Plastic cards have seen little innovation over decades, but new trends are emerging like mobile payments, rewards programs, and alternative payment providers that threaten issuer relationships.
2) Mobile payments are transforming transactions into interactions through real-time offers, loyalty programs, and mobile acceptance by small businesses. However, issuers must compete with alternative providers like PayPal.
3) Hybrid cards that combine credit and debit on one plastic are being tested but have not seen wide adoption. Mobile payments are drawing more innovation and investment currently. Chip cards adding security layers may become more commonplace for international travelers.
This document summarizes trends in the prepaid card industry, focusing on Green Dot and NetSpend as leaders. While both companies' stocks have struggled, they have continued growing revenue significantly through 2011. Green Dot relies on retail partnerships like Walmart for distribution, while NetSpend partners with check cashers and payday lenders. Both companies face challenges from increased competition from retail banks entering prepaid cards, as well as from American Express and partnerships like Kroger/U.S. Bank. Overall regulation is also increasing for the prepaid industry.
A Review of the Data Broker Collection, Use,and Sale of Consumer Data- Mark - Fullbright
company names mentioned herein are for identification and educational purposes only and are the property of, and may be trademarks of, their respective owners.
The European Commission initiated an antitrust case against MasterCard and Visa regarding their interchange fees. Interchange fees are payments from acquiring banks to issuing banks that occur during card transactions. The Commission argued these multilateral interchange fees amounted to price fixing that harmed merchants. As a result, MasterCard and Visa made commitments to reduce interchange fees. However, economists argue interchange fees play an important role in payment systems by incentivizing banks. The case raises questions about whether regulation has improved efficiency and if further action is needed regarding interchange fees and potential market failures in the payment system.
The global cards market was valued at over $250 billion in 2017. North America was the largest region in the cards market in 2017, accounting for around 60% of the global market.
Read report; https://www.thebusinessresearchcompany.com/report/cards-global-market-report-2018
The document provides an industry report on trends in the payments system industry in Q1 2021. It discusses several notable events, including continued growth of buy now pay later programs and contactless payments, delays to interchange fee increases, regulatory scrutiny of Visa's practices, and new entrants applying for banking charters. It also summarizes industry returns, M&A activity, and provides predictions for 2021.
Public Policy in Private Markets Essay-DOJ vs Amex et alKevin Rivas De Paz
The US Department of Justice and seven states filed an antitrust lawsuit against American Express, Mastercard, and Visa, alleging that their merchant restraints violated antitrust law. The complaint argued that credit card networks have substantial market power over merchants in the general purpose card network services market. Mastercard and Visa settled, agreeing to allow merchants to steer customers to less expensive payment methods. American Express did not settle and argued at trial that the plaintiffs failed to prove their claims. Ultimately, the court found the conduct violated antitrust law but encouraged the parties to settle on remedies.
Holvi, Seed, CivilisedBank, Tide, Qonto, Azlo, Penta, Arival bank
Neobanks or fintechs for retail clients, which have launched business accounts recently: TransferWise, Revolut, StarlingBank, N26
(c) Life.SREDA VC
We’re growing our compliance team, Ocean’s 11 style. Are you in? Ping us via goodguys@ariv.al - compliance is sexy, and Arival Bank and A.ID knows it: http://bit.ly/2xBj5Qk
The Canadian Prepaid Providers Organization (CPPO) commissioned FinTech Growth Syndicate (FGS) to create a "heatmap" of players in the Canadian prepaid space and their innovative solutions. FGS mapped over 60 prepaid companies and found that program managers and service providers make up the largest segments. Nearly a third of prepaid companies have US headquarters, while most Canadian headquarters are located in Ontario. The report also explores six key areas of prepaid innovation in Canada and trends in other global markets like payroll/SME banking, digital ID, benefits, and acquisitions.
The Canadian Prepaid Providers Organization (CPPO) commissioned FinTech Growth Syndicate (FGS) to create a "heatmap" of players in the Canadian prepaid space and their innovative solutions. FGS mapped over 60 prepaid companies and found that program managers and service providers make up the largest segments. Nearly a third of prepaid companies have US headquarters, while most Canadian headquarters are located in Ontario. The report also explores six key areas of prepaid innovation in Canada and trends in other global markets like payroll/SME banking, digital ID, benefits, and acquisitions.
The document provides an overview of the latest issue of the Efma Journal, including:
- A transformation of the journal to be more modern, magazine-like, and frequent with 6 issues per year.
- The cover story focuses on payments and innovations like mobile payments and their adoption globally.
- Other articles discuss post-crisis recovery in the eurozone, innovation roundtables, cheque processing trends, and an interview with Garry Lyons on MasterCard's innovation strategies.
- The issue aims to provide thought leadership on key issues while maintaining interesting articles and imagery.
Brazil is the largest e-commerce market in Latin America, responsible for over half of the region's online sales. While e-commerce is still growing, mobile internet usage and credit card adoption have increased online shopping. Mexico has a large internet population but immature retail, representing opportunity as users become buyers. Argentina faces obstacles from its economic history and delivery/payment options, but users are more engaged in e-commerce than other countries. The most important concerns for online buyers are taxes, shipping costs, currency, and payment/delivery options, but price is still the dominant factor for most purchases.
What Obama’s Credit Card Reform Means For YouCreditCardXPO
President Obama’s credit card reform directly changes legislation to make the credit card market a safer place for consumers to tread by instituting several key changes. View our slideshare to see a complete breakdown.
This document provides a summary of trends in the payments system industry for Q3 2021. It discusses predictions that were made at the start of the year and provides an update on where those predictions stand. Some of the key topics covered include continued growth in buy now, pay later segments and contactless payments, as well as mergers and acquisitions in the industry. The document also summarizes recent news items and provides an overview of how different payment companies have performed financially in 2021 so far.
Shailesh Grover of Barclays presented on electronic identity (eID) and its role in business growth and innovation. Currently, individuals maintain separate identities for different aspects of life, but the future envisions a single, unified identity that can be used across contexts. This would streamline customer experiences by reducing paperwork and allowing customers to access services more easily. It would also shift power to consumers by giving them more control over their identity and data. However, key changes are still needed, including aligning regulations around identity processes across borders and aspects of life. A unified eID system could create a more frictionless experience for both consumers and businesses.
This document discusses smart cards and their potential role as enablers for electronic commerce in the United States. It defines what a smart card is and describes its key components and features. It then outlines five key business areas where smart cards can be used: as payment vehicles, for remote access, as information managers, as marketing tools, and as customized delivery systems. It provides examples of pilots and uses in different industries like banking, campus programs, telecom, pay-TV, government benefits, travel, and identification. Finally, it discusses standards and industry groups promoting smart card adoption in the US.
Crypto-related clients, including cryptocurrency companies and investors, have faced difficulties finding banks willing to work with them. Major banks have refused to accept crypto-related customers or process transactions related to cryptocurrency due to concerns about risk, volatility, and lack of regulation in the cryptocurrency market. As a result, crypto companies and customers have had to find workarounds or alternative banks to handle their business, but still face challenges with international transactions and correspondent banks denying services related to cryptocurrency.
Overview of all crypto-friendly cards: a lot of hype but almost nothing inside
Most crypto-friendly debit cards offer similar functionality and limits, functioning essentially as linked bank accounts that allow spending from cryptocurrency holdings. While there are over 30 such cards, usage remains niche due to limited merchant acceptance of cryptocurrencies and operational challenges for startups in meeting bank transaction volumes. Additionally, some traditional banks actively discourage cryptocurrency purchases and spending by closing customer accounts or declining transactions related to digital currencies.
New and Beta banks, feature comparision by Stave Partners.
For more information and reports please visit:
www.stavepartners.com
For partnership:
info@stavepartners.com
Esteve Camps has over 20 years of experience in technology fields including payments, fraud, banking, e-commerce, and digital transformation. He has leadership experience and is committed to meeting company needs by supporting its mission, vision, and values. The document defines key terms related to e-commerce payments such as payment service provider, acquirer, card-not-present transactions, and interchange fees.
E-wallets have grown in popularity in India since demonetization due to the scarcity of cash. Digital wallets allow online transactions through smartphones and provide convenience for users by removing constraints like time and location. E-wallets provide transparency, speed, increased customer satisfaction, and business insights that help companies customize payments and control transactions without third parties. The document focuses on the benefits of digital wallets and how to use digital payment systems.
The document discusses the Futures & Options Expo 2000 conference which covered regulatory changes in the futures industry, including proposed legislation to modernize regulation. It also discusses the Chicago Mercantile Exchange's new business-to-business initiative and partnerships, as well as issues facing the managed futures sector. The conference showed the ongoing transformation in the futures industry driven by globalization, technology changes, and deregulation.
This document provides information about credit cards, including:
- A credit card allows the holder to buy goods and services with the promise to pay the issuer later. Most are issued by banks and are made of plastic.
- Credit cards originated in the 1920s and became widely used starting in the 1950s and 1960s with the creation of Diners Club and other general purpose cards.
- Credit cards work by verifying funds during purchase and sending the customer a monthly statement to pay. Interest is charged if the full balance isn't paid. Customers receive rewards while merchants pay fees for each transaction.
The document provides an overview of the history and evolution of the card and loyalty industries from 1914 to present day. It defines key terms related to cards, payments, and loyalty programs. It also outlines the major players and how money is made in the card and loyalty industries through interchange fees and rewards programs.
The document provides an industry report on trends in the payments system industry in Q1 2021. It discusses several notable events, including continued growth of buy now pay later programs and contactless payments, delays to interchange fee increases, regulatory scrutiny of Visa's practices, and new entrants applying for banking charters. It also summarizes industry returns, M&A activity, and provides predictions for 2021.
Public Policy in Private Markets Essay-DOJ vs Amex et alKevin Rivas De Paz
The US Department of Justice and seven states filed an antitrust lawsuit against American Express, Mastercard, and Visa, alleging that their merchant restraints violated antitrust law. The complaint argued that credit card networks have substantial market power over merchants in the general purpose card network services market. Mastercard and Visa settled, agreeing to allow merchants to steer customers to less expensive payment methods. American Express did not settle and argued at trial that the plaintiffs failed to prove their claims. Ultimately, the court found the conduct violated antitrust law but encouraged the parties to settle on remedies.
Holvi, Seed, CivilisedBank, Tide, Qonto, Azlo, Penta, Arival bank
Neobanks or fintechs for retail clients, which have launched business accounts recently: TransferWise, Revolut, StarlingBank, N26
(c) Life.SREDA VC
We’re growing our compliance team, Ocean’s 11 style. Are you in? Ping us via goodguys@ariv.al - compliance is sexy, and Arival Bank and A.ID knows it: http://bit.ly/2xBj5Qk
The Canadian Prepaid Providers Organization (CPPO) commissioned FinTech Growth Syndicate (FGS) to create a "heatmap" of players in the Canadian prepaid space and their innovative solutions. FGS mapped over 60 prepaid companies and found that program managers and service providers make up the largest segments. Nearly a third of prepaid companies have US headquarters, while most Canadian headquarters are located in Ontario. The report also explores six key areas of prepaid innovation in Canada and trends in other global markets like payroll/SME banking, digital ID, benefits, and acquisitions.
The Canadian Prepaid Providers Organization (CPPO) commissioned FinTech Growth Syndicate (FGS) to create a "heatmap" of players in the Canadian prepaid space and their innovative solutions. FGS mapped over 60 prepaid companies and found that program managers and service providers make up the largest segments. Nearly a third of prepaid companies have US headquarters, while most Canadian headquarters are located in Ontario. The report also explores six key areas of prepaid innovation in Canada and trends in other global markets like payroll/SME banking, digital ID, benefits, and acquisitions.
The document provides an overview of the latest issue of the Efma Journal, including:
- A transformation of the journal to be more modern, magazine-like, and frequent with 6 issues per year.
- The cover story focuses on payments and innovations like mobile payments and their adoption globally.
- Other articles discuss post-crisis recovery in the eurozone, innovation roundtables, cheque processing trends, and an interview with Garry Lyons on MasterCard's innovation strategies.
- The issue aims to provide thought leadership on key issues while maintaining interesting articles and imagery.
Brazil is the largest e-commerce market in Latin America, responsible for over half of the region's online sales. While e-commerce is still growing, mobile internet usage and credit card adoption have increased online shopping. Mexico has a large internet population but immature retail, representing opportunity as users become buyers. Argentina faces obstacles from its economic history and delivery/payment options, but users are more engaged in e-commerce than other countries. The most important concerns for online buyers are taxes, shipping costs, currency, and payment/delivery options, but price is still the dominant factor for most purchases.
What Obama’s Credit Card Reform Means For YouCreditCardXPO
President Obama’s credit card reform directly changes legislation to make the credit card market a safer place for consumers to tread by instituting several key changes. View our slideshare to see a complete breakdown.
This document provides a summary of trends in the payments system industry for Q3 2021. It discusses predictions that were made at the start of the year and provides an update on where those predictions stand. Some of the key topics covered include continued growth in buy now, pay later segments and contactless payments, as well as mergers and acquisitions in the industry. The document also summarizes recent news items and provides an overview of how different payment companies have performed financially in 2021 so far.
Shailesh Grover of Barclays presented on electronic identity (eID) and its role in business growth and innovation. Currently, individuals maintain separate identities for different aspects of life, but the future envisions a single, unified identity that can be used across contexts. This would streamline customer experiences by reducing paperwork and allowing customers to access services more easily. It would also shift power to consumers by giving them more control over their identity and data. However, key changes are still needed, including aligning regulations around identity processes across borders and aspects of life. A unified eID system could create a more frictionless experience for both consumers and businesses.
This document discusses smart cards and their potential role as enablers for electronic commerce in the United States. It defines what a smart card is and describes its key components and features. It then outlines five key business areas where smart cards can be used: as payment vehicles, for remote access, as information managers, as marketing tools, and as customized delivery systems. It provides examples of pilots and uses in different industries like banking, campus programs, telecom, pay-TV, government benefits, travel, and identification. Finally, it discusses standards and industry groups promoting smart card adoption in the US.
Crypto-related clients, including cryptocurrency companies and investors, have faced difficulties finding banks willing to work with them. Major banks have refused to accept crypto-related customers or process transactions related to cryptocurrency due to concerns about risk, volatility, and lack of regulation in the cryptocurrency market. As a result, crypto companies and customers have had to find workarounds or alternative banks to handle their business, but still face challenges with international transactions and correspondent banks denying services related to cryptocurrency.
Overview of all crypto-friendly cards: a lot of hype but almost nothing inside
Most crypto-friendly debit cards offer similar functionality and limits, functioning essentially as linked bank accounts that allow spending from cryptocurrency holdings. While there are over 30 such cards, usage remains niche due to limited merchant acceptance of cryptocurrencies and operational challenges for startups in meeting bank transaction volumes. Additionally, some traditional banks actively discourage cryptocurrency purchases and spending by closing customer accounts or declining transactions related to digital currencies.
New and Beta banks, feature comparision by Stave Partners.
For more information and reports please visit:
www.stavepartners.com
For partnership:
info@stavepartners.com
Esteve Camps has over 20 years of experience in technology fields including payments, fraud, banking, e-commerce, and digital transformation. He has leadership experience and is committed to meeting company needs by supporting its mission, vision, and values. The document defines key terms related to e-commerce payments such as payment service provider, acquirer, card-not-present transactions, and interchange fees.
E-wallets have grown in popularity in India since demonetization due to the scarcity of cash. Digital wallets allow online transactions through smartphones and provide convenience for users by removing constraints like time and location. E-wallets provide transparency, speed, increased customer satisfaction, and business insights that help companies customize payments and control transactions without third parties. The document focuses on the benefits of digital wallets and how to use digital payment systems.
The document discusses the Futures & Options Expo 2000 conference which covered regulatory changes in the futures industry, including proposed legislation to modernize regulation. It also discusses the Chicago Mercantile Exchange's new business-to-business initiative and partnerships, as well as issues facing the managed futures sector. The conference showed the ongoing transformation in the futures industry driven by globalization, technology changes, and deregulation.
This document provides information about credit cards, including:
- A credit card allows the holder to buy goods and services with the promise to pay the issuer later. Most are issued by banks and are made of plastic.
- Credit cards originated in the 1920s and became widely used starting in the 1950s and 1960s with the creation of Diners Club and other general purpose cards.
- Credit cards work by verifying funds during purchase and sending the customer a monthly statement to pay. Interest is charged if the full balance isn't paid. Customers receive rewards while merchants pay fees for each transaction.
The document provides an overview of the history and evolution of the card and loyalty industries from 1914 to present day. It defines key terms related to cards, payments, and loyalty programs. It also outlines the major players and how money is made in the card and loyalty industries through interchange fees and rewards programs.
Credit cards originated in the 1920s when companies issued metal cards to customers for purchases. Diners Club introduced the first general-purpose credit card in 1950 that could be used at multiple merchants. In the late 1950s and 1960s, other cards like American Express and BankAmericard (later Visa) launched and the credit card industry grew rapidly. Regulation of the industry became necessary as processing became too large for individual banks to handle alone.
A credit card allows individuals to make purchases and pay back the amount over time, with interest charged on unpaid balances. Credit cards are issued by banks or other financial institutions to customers who can then use them to buy goods and services. Key features of modern credit cards include annual fees, interest charges, cash advance fees, and other penalties. Credit cards provide convenience for purchases but can also contribute to debt if not managed carefully.
The history of credit card processing is a fascinating tale of innovation, technology, and the quest for convenience. Visit us at: https://webpays.com/credit-card-processing.html
Managerial Economics and Business Strategy, 6e Page 1 Visa.docxinfantsuk
Managerial Economics and Business Strategy, 6e Page 1
Visa and MasterCard’s Association Potentially
Anticompetitive
Michael Baye and Patrick Scholten prepared this case to serve as the basis for classroom
discussion rather than to represent economic or legal fact. The case is a condensed and slightly
modified version of the public copy of the Complaint filed in United States of America v. Visa U.S.A.,
Inc. et al. dated October 7, 1998. No. 98-civ.7076.
OVERVIEW OF MARKET FOR GENERAL PURPOSE CARD SERVICES
Visa and MasterCard compete in the market for general purpose card network
products and services. General purpose cards, which include credit cards and charge cards,
are payment devices that enable consumers to make purchases from unrelated merchants
without immediately accessing or reserving funds. Visa and MasterCard are the two largest
general purpose card networks. Together, they account for over 75% of all purchases made
with general purpose cards in the United States.
Visa and MasterCard are joint ventures — or, as they call themselves, “associations”
— created, owned, governed, and operated by and in the interests of their member banks.
These banks use the associations’ products and services either to issue cards to consumers,
provide card acceptance services to merchants, or both.
The same large banks control both associations by simultaneously serving on the
board of directors of one and on important committees of the other. In addition, each of
these banks issues significant numbers of both Visa and MasterCard cards. The control of
the two associations by banks that have significant interests in both — known in the industry
as “duality” — has possibly substantially lessened competition between Visa and MasterCard
because these banks seem to have been, and continue to seem to seem to be, significantly less
willing to fund and implement competitive initiatives that would cause consumers to switch
their business from one association to the other.
In addition, both Visa and MasterCard — on behalf of and in collaboration with the
banks that govern them — have adopted rules and policies that might restrict the ability of all
member banks to do business with American Express, Discover/Novus, or any other network
that the controlling banks deem to be “competitive.” Importantly, Visa and MasterCard do
not apply these rules to one another. Banks can therefore do business with the two largest
general purpose card networks, but not with smaller competitor networks. These
exclusionary rules and policies might eliminate certain forms of competition among the Visa
and MasterCard member banks, and might have effectively precluded American Express and
Discover/Novus from competing to enlist banks in the U.S. to issue their cards.
Through their common control of both Visa and MasterCard, the largest banks might
have stifled competition between these two networks and might have thwart ...
This document discusses various marketing strategies that can be used to grow a business. It recommends focusing marketing efforts on a specific niche to attract the best customers. It also suggests that professionals should position themselves as experts in their field by providing free information and education to prospects. Developing relationships with complementary professionals to obtain referrals is also presented as an effective strategy. The document stresses the importance of maintaining ongoing communication with past prospects through various follow-up methods in order to turn them into paying customers over time.
Number of innovative products for making payment has developed in topical year, taking advantage of swift
Technological steps forward and financial market development. Transactions refined using these innovative products are accounting for a mounting proportion of the dimensions and value of domestic and cross-border retail payments. This paper is been framed based on the concept of payments made through Plastic Money. Plastic money is the alternative to the cash or the standard 'money'. Plastic money is referring to the credit cards or the debit cards that we use to make purchases in our everyday life. Plastic money is much more convenient to carry around, as you do not have to carry a huge sum of money with you. Though this plastic money comprises different payment channels, this paper is focusing to bring the conceptual framework of Credit Card.
This document provides an overview of research methodology for a project report on factors behind the use of plastic money. It begins with an introduction to plastic money and its history from the 1900s to present day. It then discusses the Australian banking industry and provides context on the key banks and financial institutions in Australia. The document aims to provide background information and context for factors that may influence the use of plastic money in Australia.
This document provides an overview of research methodology for a project report on factors behind the use of plastic money. It includes an introduction to plastic money and its history from the 1900s to present day. The history section discusses the development of early charge cards, credit cards like Diners Club, and the introduction of major brands like American Express, BankAmericard/Visa, and Mastercard. It also outlines key innovations like the magnetic stripe, ATMs, and the development of debit cards and technologies that enabled mobile payments. The document concludes with background on the Australian banking industry and its "four pillars" policy toward mergers between the top four banks.
This document provides an overview of research methodology for a project report on factors behind the use of plastic money. It includes an introduction to plastic money and its history from the 1900s to present day. The history section discusses the development of early charge cards, credit cards like Diners Club, and the introduction of technologies like magnetic stripes, ATMs, and chip technology. It also discusses the development of major card brands like Visa, Mastercard, and Discover. The document concludes with sections on recent mobile payment methods and an overview of the Australian banking industry and key banks.
I am sure You Didn’t Know About these 5 Credit Card Facts
Instructions to Lower Interest Rates on Credit Cards
More than 167 million American grown-ups have no less than one Visa. That is 70% of all buyers managing month to month charge card bills and diverse Visa benefits, expenses, loan fees, and reward programs. Charge cards have turned into a piece of the vast majority of our ways of life. However, when and why did we as a whole begin paying with plastic? Here are 5 truths that assistance clarify why and how Visas have come to assume such a critical part in our lives today.
1. American Express Was the First Plastic Credit Card
American Express begun as an expedited delivery business in 1850, however extended to a money related administration super organization by the mid twentieth century. Cafes Club had really presented their Mastercard (travel and excitement card) years before American Express and charged a $5 yearly expense. American Express propelled their form of the Visa in 1958, however charged a $6 yearly expense to look after eliteness. The paper card highlighted a purple ink plan that looked like their explorers checks. After a year, they began to change over their cards to plastic. Burger joints Club went with the same pattern in 1961 and, from there on, the Mastercard was plastic.
यह भी पढ़ें :- घर में बनाये जिंजर लेमन बीयर और दूर करे कैंसर और गठिया जैसी खतरनाक बीमारियों को
यह भी पढ़ें :- जानिये अगर कुछ दिन नमक न खाए तो इसका सेहत पर क्या असर पड़ेगा
2. Christmas Thieves Prompted Government Credit Card Regulation
Bank Mastercards had not been famous in the 1960s, along these lines, in a joint exertion, the city's banks had sent a large number of spontaneous charge cards to homes in and around Chicago without a moment to spare for Christmas shopping in 1966. Not at all like Mastercards conveyed today, every one of the cards were at that point dynamic and did not require anything other than rather a mark at buy to utilize. Crooks crosswise over Chicago stole a large number of bank Mastercards from the mail station and the letter drops of multifamily homes and flats. They charged a huge number of dollars on the stolen cards at retailers over the city. Chicago banks lost an expected $6 to $12 million dollars ($43 to $85 million today) in fake Christmas shopping buys.
The credit card networks industry represents an attractive investment opportunity. It is a profitable oligopoly with strong brand recognition and high barriers to entry. While cash usage is declining, digital payments are on the rise and often rely on the networks. Technological advances like EMV chips and tokenization are strengthening the networks' position rather than disrupting it. The shift from cash to digital payments will allow the networks to capture more of the large commercial spending market. Risks such as economic slowdowns or new payment methods emerging are possible but unlikely to materialize soon. Overall the trends favor continued growth for the credit card networks.
Fundamental forces-of-change-in-banking2869Pankaj Kumar
The document discusses the fundamental forces that have transformed the banking industry over time. It describes how regulations originally separated commercial banking, investment banking, and insurance but how deregulation and other forces have blurred industry lines. Technological advances, financial innovation, and increased competition have changed the nature of banking and what constitutes a bank. Regulations that once protected smaller banks now hamper their ability to diversify and compete against larger, non-bank financial institutions.
Il documento "Diners and icbc agreement announcement" dell'evento CARTE 2012. Conference&Expo su carte e pagamenti innovativi.
Roma, Palazzo dei Congressi
15 e 16 novembre 2012
Maggiori informazioni: http://www.abieventi.it/eventi/1633/carte-2012
This document provides a stock analysis report on Visa by Birkey Investment Group. It summarizes the payment card industry, analyzes Visa's financial performance and position within the industry, and recommends purchasing Visa stock. Visa dominates the global payment processing market with over 50% of transactions. It has strong financial trends in revenue, earnings, and margins that distinguish it from competitors like MasterCard. Visa's recent acquisition of Visa Europe will help it grow further in the European market. Based on this analysis, the report recommends Visa as a solid investment opportunity.
Chap. 5. banking industry structure and competition (1)mikeachum
The document discusses the historical development of the banking industry in the United States. It outlines several key events and regulations that shaped the industry, such as the Glass-Steagall Act of 1933 that separated commercial and investment banking and its repeal in 1999. It also discusses the growth of banking consolidation and the decline of traditional banking due to financial innovation and deregulation, which allowed other entities to engage in banking activities. Finally, it provides an overview of the structure of the US commercial banking industry and international banking.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
[4:55 p.m.] Bryan Oates
OJPs are becoming a critical resource for policy-makers and researchers who study the labour market. LMIC continues to work with Vicinity Jobs’ data on OJPs, which can be explored in our Canadian Job Trends Dashboard. Valuable insights have been gained through our analysis of OJP data, including LMIC research lead
Suzanne Spiteri’s recent report on improving the quality and accessibility of job postings to reduce employment barriers for neurodivergent people.
Decoding job postings: Improving accessibility for neurodivergent job seekers
Improving the quality and accessibility of job postings is one way to reduce employment barriers for neurodivergent people.
How Does CRISIL Evaluate Lenders in India for Credit RatingsShaheen Kumar
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Economic Risk Factor Update: June 2024 [SlideShare]Commonwealth
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For more market updates, subscribe to The Independent Market Observer at https://blog.commonwealth.com/independent-market-observer.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
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Independent Study - College of Wooster Research (2023-2024) FDI, Culture, Glo...AntoniaOwensDetwiler
"Does Foreign Direct Investment Negatively Affect Preservation of Culture in the Global South? Case Studies in Thailand and Cambodia."
Do elements of globalization, such as Foreign Direct Investment (FDI), negatively affect the ability of countries in the Global South to preserve their culture? This research aims to answer this question by employing a cross-sectional comparative case study analysis utilizing methods of difference. Thailand and Cambodia are compared as they are in the same region and have a similar culture. The metric of difference between Thailand and Cambodia is their ability to preserve their culture. This ability is operationalized by their respective attitudes towards FDI; Thailand imposes stringent regulations and limitations on FDI while Cambodia does not hesitate to accept most FDI and imposes fewer limitations. The evidence from this study suggests that FDI from globally influential countries with high gross domestic products (GDPs) (e.g. China, U.S.) challenges the ability of countries with lower GDPs (e.g. Cambodia) to protect their culture. Furthermore, the ability, or lack thereof, of the receiving countries to protect their culture is amplified by the existence and implementation of restrictive FDI policies imposed by their governments.
My study abroad in Bali, Indonesia, inspired this research topic as I noticed how globalization is changing the culture of its people. I learned their language and way of life which helped me understand the beauty and importance of cultural preservation. I believe we could all benefit from learning new perspectives as they could help us ideate solutions to contemporary issues and empathize with others.
2. Elemental Economics - Mineral demand.pdfNeal Brewster
After this second you should be able to: Explain the main determinants of demand for any mineral product, and their relative importance; recognise and explain how demand for any product is likely to change with economic activity; recognise and explain the roles of technology and relative prices in influencing demand; be able to explain the differences between the rates of growth of demand for different products.
2. THE ORIGINS OF CREDIT CARDS AND BARCLAYCARD
Credit cards emerged in the first half of the 20th Century. Initially credit cards
were used for identification purposes against non-cash purchases. The launch of
Travel and Entertainment (T&E) cards by Diners Club in 1950 was a turning
point because bills from places such as hotels, restaurants and airlines were
reimbursed by the issuer and then billed to be paid in full by the customer. T&E
cards, thus, merely functioned as a charge card.2 Diners' T&E cards led to the
establishment of similar cards by American Express and Carte Blanche.
It was around this time when the Franklin National Bank (based in New York)
developed what is recognised as the first real credit card. This innovation
considered offering rollover credit up to an authorised credit limit. Managers at
Franklin National Bank also recognised the competitive potential of issuing
credit cards to other banks’ customers. Due to regulatory constraints, however,
branch banking in the US was highly localised. At the same time, there was an
increasingly mobile population across the country as a whole. A franchising
system developed when trying to find ways to facilitate customer purchases
anywhere in the US and, at the same time, increase credit card usage. Under
this system banks acquired the right to issue branded cards in a particular city
that customers could use with collaborating merchants locally and elsewhere in
the US.
In 1958 the Bank of America, with the advantage of its huge West Coast
network, launched the blue, white and gold BankAmericard. By 1965 and
alongside its own branch network, Bank of America had established a
successful franchising system owing to high promotional activities and
considerable effort in establishing a large merchant network. In this way
BankAmericard customers were provided with a national (and eventually
international) network of service points which was later to become Visa
International. Unlike the T&E card, which was basically a charge card, credit
cards expanded rapidly.
In subsequent years marketing activities for credit cards exploded. At the same
time the merchant network was widened and the right to issue Visa cards
extended to an increasing number of banks as well as non-banking institutions.
Alongside these developments, Visa and MasterCard evolved as independent
payment organisations owned by issuing banks.
Duality was introduced in 1988, whereby banks could issue both Visa and
MasterCard credit cards. However, both Visa and MasterCard prevented their
members from issuing American Express or Discover cards. A practice that was
challenged at the end of the 1990s in the US by both the Federal government
and a powerful group of retailers (who wanted to promote their own cards.)
In any event, duality further enhanced the potential for scale economies since
banks could process all the Visa and MasterCard transactions of their
2
In a charge card all transactions for a given period (often monthly) are expected to be paid in
full at the settlement date. In a credit card there is rollover credit as the cardholder may choose
to pay any amount over the minimum required and is charged interest on the outstanding
balance. In a debit card payment is linked to a customer's current account. There is no credit
facility unless it is a feature of the underlying bank account.
2
3. merchants. As illustrated in Exhibit 1, payment associations have no direct
contractual contact with customers or merchants. Instead, they provide all the
mechanisms that enable card transactions. Moreover, payment associations are
not directly exposed to card fraud as it is the issuing bank that bears the
incidence of the misused cost of fraud. The growth of payment associations thus
relied on advances in the technology to settle payments and on the growth of
their members' customer and merchant base.
EXHIBIT 1 HERE
Barclays was the first UK bank to recognise the potential of credit cards. After
evaluating the operations of BankAmericard in the US, Barclays Bank
negotiated a franchise from Bank of America at the end of 1965. A small team
was set up to plan a UK launch under the Barclaycard brand. After six months
30,000 retailers were signed up. Early promises to retailers to publish the name
and address of every shop accepting Barclaycard led to what is still believed to
be one of the largest ever press advertisements. It appeared in the Daily Mail on
29 June 1966 extending over eight pages and carrying all the 30,000 names and
addresses of participating retailers. Successful acceptance of Barclaycard by
the British adult population meant that by the end of 1966 Barclays Bank had
passed the milestone of 1 million Barclaycard holders.
INFORMATION TECHNOLOGY
During the 1980s and 1990s, Barclaycard continued to benefit from being the
‘first mover’ in many aspects of the banking business including:
• issuing the first credit card in the UK,
• being the first credit card company to have an institutional presence on the
Internet,
• starting the first loyalty scheme in the UK,
• being the first bank to enable credit card payments over the Internet.
Clearly, the use of IT applications and computer technology in particular were
critical for implementing Barclaycard's strategy. Excluding marketing costs, the
initial investment of Barclays in the Bank of America franchise was low.
Barclaycard’s management team was able to migrate the entire operation from
the US. This included Bank of America’s computer programs, and the terms and
conditions of service to both retailers/merchants and cardholders. Only minor
modifications required for the UK purposes as stated by a senior executive at
Barclaycard:
'From Barclaycard’s viewpoint, it envisaged that the complexities of adopting a
US system for UK use were for example integration with feeder systems for
capturing voucher details, customer payments (as the US had a radically
different banking system), authorization (which was then an intense manual
process), Country Club Billing (where individual transaction slips were matched
and sent out with the statement) and address formats/postcodes which were
very different from the United States model.'
3
4. Although some customisation was required, the original system (like its paper or
cardboard-based predecessors), relied primarily on carbonless duplicate paper
vouchers imprinted with details embossed on the plastic card. Credit control was
then managed using floor (merchant) limits combined with telephone
authorisation. Growth in card usage convinced Barclaycard that automation
through a fully computer-based transaction system was required. One was thus
commissioned in 1974 to eliminate much of the paperwork, to speed up the
authorisation process, and also to provide narrative statements for cardholders.
The need to accelerate service delivery time eventually led to the formation of a
platform for 'real time' operations: in other words, an array of IT applications that
allowed automatic credit authorisation and speeded funds transfer from the
merchant or retailer to the bank. This was achieved through a well-developed
infrastructure developed by Visa and MasterCard. In particular, using extensive
communications networks to link Visa’s and Mastercard’s electronic fund
transfer protocols as well as their 24-hour-a-day and 7-day-a-week credit
authorisation systems.
Alongside the developments in the credit cards market, banks also issued
cash/cheque guarantee cards, and installed automated teller machine (ATM)
networks to lower the costs of basic banking services. Barclays Bank led the
world with the first operational ATM in 1967 while IBM introduced the first
magnetic stripe plastic cards in 1969. Together these innovations marked the
birth of electronic banking. Bank systems then developed to implement 'real
time' transactions through ATMs.
Barclay’s early adoption of ATMs was in parallel with the extended use of credit
cards. Initially, the heavy investment required to build an ATM network was seen
as a major source of competitive advantage for large banks, so interconnection
was slow to develop. But after 30 years the absurdity of terminals connected to
different networks and of ATMs located side by side was recognised only after
terminal density had reached saturation point. This eventually resulted in a single
interconnected UK network in 1999. Barclays then announced that it would
charge non-customers for using its machines - a proposal that was withdrawn
after being vilified in the press.
Given the slowness with which banks integrated their networks it was not
surprising that standards developed within Visa and MasterCard were adopted
for debit cards. In the UK, banks were again split between the Switch and
Visa/Delta formats. Debit cards were a new source of growth for card issuing
banks during the late 1980s to the extent that in 1991 MasterCard, with its
European partner Europay International, launched their global online direct debit
system to provide immediate (i.e. real-time) transfers from customers’ accounts
against transactions (branded Maestro). Shortly after that a system to support
direct debit for ATM cash withdrawal (branded Cirrus) was developed
worldwide.
In summary, developments in the 40 years that followed the launch of credit
cards in the UK by Barclaycard were marked by the continuing improvement of
the industry standards, interconnecting and interoperating hardware and
software, and overlapping membership of the two technology platforms for
payment systems (namely Visa International and MasterCard) as well as by
almost identical functionality between cards. Barclaycard’s achievement over
4
5. this period was that it retained the advantage that was gained through early entry
and remained as the market leader, not just with the basic credit card services
but also in many aspects of card business. From scratch, Barclaycard grew to
be the largest credit card business in the UK, with a presence in other European
countries and also in parts of Africa.
TRANSACTION PROCESSING
The transition from paper to electronics introduced large scale economies in
card processing. Due to dominant market share of Visa and MasterCard cards,
processing of credit card transactions is determined by these two networks.
Such processing is also characterised by relatively high one-off investments,
such as setting up the interface with a global communications infrastructure.
Software, equipment and operating staff are relatively independent of volume
and therefore offer economies of scale. In order to take the advantage of such
scale economies and as had been the case in other countries, Barclaycard used
electronic processing heavily in its cards business to facilitate the transition from
paper to electronic processing. In 2003, with 9 million cards issued in the UK
alone, Barclaycard had 27 per cent of total credit market when its nearest rival,
Lloyds TSB, only had 5 million cardholders.
Although outsourcing was favoured by small-scale issuers, Barclaycard rejected
the potentially profitable opportunities of servicing other card issuers until 2003
and, thus, failed to take full advantage of scale economies. Rival issuers
including Bank of Scotland, Royal Bank of Scotland and National Westmister
provided card services on behalf of other institutions such as building societies
and retailers. Outsourcing of card services including plastic card issuing,
statement printing or even customer services became more favoured with the
entrance of US 'mono-lines' in the UK market. For instance, MBNA had over 16
million cardholders in the US at the time of its entry into the UK market. MBNA,
therefore, brought a good deal of experience in terms of managing a credit
cards business and eventually became very active in providing its services to
other potential issuers in the UK (such as department stores and retailers).
The strength of banks’ links with their customers was increasingly being tested
by other businesses, such as utility companies and petrol retail companies, who
have frequent close contact with their customers and could offer direct incentives
for customers to take their card rather than the banks’ card. Barclaycard again
found a way forward. By 2003 most retailers no longer dealt directly with card
associations such as Visa. Rather an acquirer consolidated the electronic
readings on the cards through their own multi-card reader, which would be
rented to the merchant. The reader could be provided by Barclaycard or a third
party such as Streamline (who in turned was owned by HSBC, another UK-
based multinational bank). Thus instead of the need for the old system needing
one reader for each card, the retailer accepted the acquirer provided these links
through its own software. The system as portrayed in Exhibit 1 became more
diffuse as card issuers knew of their own customers whilst the acquirer could
know about the merchant's customer base. Barclaycard was the only bank card
which was a card issuer as well as an acquirer and hence, was in a position to
gather information about its own and merchants' customers.
5
6. Another technological development which affected card processing was the
introduction of smart or chip cards. The initial benefit of chip was to reduce
counterfeiting and to increase security for Internet and other remote transactions
(see Exhibit 2). For instance, its introduction in France a decade earlier reduced
card fraud by customers to a tiny fraction of previous levels. Smart cards can
store a vast amount of transaction data without the need to access multiple
networks as required by a typical credit card transaction. The on-board chip in
smart cards can handle complex security features including biometrics, which
reduces card delinquency for banks switching to the new technology.
EXHIBIT 2 HERE
The UK's nationwide roll-out for chip cards started in the late 2003. This move
aimed to cut down credit card fraud by two-thirds. By the roll-out date, Visa
member banks had already issued 23 million chip cards and were offering e-
commerce transactions which were supported by Visa’s Secure Electronic
Transaction platform. At the same time, Mastercard had developed similar
capabilities through its purchase of Mondex, the smart card based electronic
wallet developed by National Westminster Bank.
The chip roll-out originally presented issuers, retailers and end consumers with
technological and user educational challenges. In another technological twist,
innovations in information technology also offered the potential for transactions
between personal or commercial customers and retailers to be handled directly
and securely without the need to contact their banks. For instance, mobile phone
companies were experimenting with the use of bar codes (similar to those used
in food wrapping) displayed on the handset's screen. Using systems such as
those for text messaging (SMS) they effectively turned a mobile phone into a
payment mechanism when interacting with a device (already in use by all
supermarkets) that could scan and store transaction details.
CARD PROFITABILITY
Exhibit 3 summarises the revenue stream for card issuers. These comprise
seven potential sources of income including: annual card fees charged to
cardholders, cash withdrawal fees, income from interest charged on outstanding
balances which are rolled over, income from proceeds emerging the use of card
abroad, late payment charges, commissions received from acquiring banks (i.e.
interchange income) and other sources of income (such as printing additional
statements).
EXHIBIT 3 HERE
Despite being the initial and for a considerable period the only credit card issuer
in the UK, Barclaycard made losses for the first decade of its operations as it
built up its card and merchant volumes. As the market leader it consistently
priced Barclaycard at a premium. As late as 2001 Barclaycard still charged a
6
7. discretionary annual card fee as well as the highest interest rate on credit card
debt (annual percentage rate or APR) in the market. The result of the pricing
strategy, however, was a healthy financial contribution to the parent organisation
as illustrated in the financial summary in Exhibit 4.
EXHIBIT 4 HERE
Cards have delivered a high proportion of non-interest income and are,
therefore, attractive to banks which have to provide regulatory capital to back
interest bearing assets. Actually, the growth of credit cards has been part of the
reason why both international and British banks have been able to more than
double the proportion of their income earned as fees and commissions over the
last 30 years.
The decade to 2003 reflected a period when competition between UK card
issuers intensified and characterised by extending activities and product
development, thus vastly increasing the range of products and services available
to final consumers. A plethora of competitors in the credit card market emerged
on the back of the open membership policies of Visa and MasterCard. New
competitors tried to develop market share through low rates (including a zero
interest rate as introductory offer) on outstanding balance transferred from other
providers.
Most of the new card entrants, however, experienced high level of customer
disloyalty because once the introductory offer ended, customers switched to
other issuers. But even with a flood of new entrants during the 1990s,
Barclaycard kept its defection rates below 5 per cent per annum. Defection rates
for established participants were low thanks to the inertia of bank customers,
which was historically high. Even for credit cards, where the formalities of
changing suppliers are minimal, customer retention rates were also high
historically. For instance, according to some industry estimates the average
adult Briton was four times more likely to divorce than to change credit card
supplier.
Acquisition of new customers was a different story. By 1995 Barclaycard's share
of new cards issued dropped down to 15 per cent of total new acquired
customers: well below their ongoing market share of 30 per cent of the market.
The drop in new acquired customers thus reflected how card processing
specialists such as MBNA or Royal Bank of Scotland gained ground at the
expense of participants which had grown organically and issued cards only to
their own customer base. See Exhibit 5.
EXHIBIT 5 HERE
At the same time and in spite of customers at the turn of the millennium having
access to credit far easier and more cheaply than ever before, the UK
government considered that interest rates charged for outstanding credit card
balances were still far higher than the level they deemed as acceptable. This led
7
8. to a government enquiry that included chief executives of big card issuers. The
aim was to establish why interest charges on UK credit cards had declined by
only a third since 1992 when Bank of England had taken LIBOR (i.e. the main
reference rate) to two-thirds of its 1992 value (and the lowest in the last forty
years!). As a result of the enquiry, banks and credit card issuers agreed to make
credit card charges more transparent and easier to understand and to introduce
so called ‘honesty tables’.3
With around £9.7 billion pounds of outstanding balances in 2003, Barclaycard
was required to provide £480 million pounds of regulatory capital. So profits of
£615 million in 2002 provided a return of close to 100 per cent on equity, a vivid
contrast with a British bank’s typical return on equity (ROE) of 15 per cent per
annum. This was also an indicator that, despite claims of increased competition,
credit cards remained a remarkably profitable component in a bank’s portfolio.
For example, the profitability of the card business within Citibank was such that it
had been estimated to be worth 50 per cent more as a stand alone business
than the entire value of the bank.
Another element in the profit equation is the average value of balances settled
outside the 'free interest period'. If a customer pays off the outstanding balance
in full, then the issuing bank earns only interchange income and commission
fees. As seen in Exhibit 6, the percentage of interest bearing credit card
balances was at around 75 per cent as of December 2001, which was much
lower than 1998 and 1999 averages. This was due to introductory offers such as
low or zero interest rates for balance transfers and reflected the widespread use
of such offers by cardholders between 1998 and 2003.
EXHIBIT 6 HERE
In parallel to the industry average, Barclays aimed for its customers to have at
least 70 per cent of interest earning balances outside the free interest period.
Thus, card issuers provide medium term consumer finance. But to be able to
grow credit card balances profitably issuers must entertain the possibilities
under which credit risk might increase. For instance, in 2000 Barclaycard's
transaction volume grew by 12 per cent while charges for bad and doubtful debts
increased by 34 per cent. As the economy slowed down in 2002, however,
transaction volume grew by 8 per cent while bad debt charges also grew by 8
per cent. Financial performance thus suggests that the aim of credit card
managers is to find customers who need roll-over credit but will not default on
repayments. Barclaycard's in-house skills in measuring and monitoring credit
risk have, therefore, been crucial to their strategy.
3
Called the Schumer box in the US, they draw together information traditionally in 'the small
print' of an application into a single table, making loans and credit card offerings from different
providers easier to understand and compare.
8
9. CHALLENGES TO BARCLAYCARD'S STRATEGY
Barclaycard's strategy aims to develop and maintain market leadership by
differentiating its product range: for instance, designing a comprehensive
benefits package to potential and existing cardholders as described in Exhibit 7.
Products and services were sometimes introduced independently from those at
the Barclays Group while, at the same time, not all offers were available to all
cardholders: they were linked to the customer's banking relationship with
Barclays (e.g. Barclaycard Open Plan). At the same time, other UK retail banks
would tailor the marketing of their credit cards as bundled with other banking
products.
EXHIBIT 7 HERE
Barclaycard’s strategy in the cards market has been associated with a number
of major factors. The first is the continued growth of the credit card market as
shown in Exhibits 8 and 9. Over the period of 1991 to 2001 the volume of credit
card transactions grew by 9 per cent per annum, while debit cards transactions
grew by 31 per cent. Outstanding balances, on the other hand, tripled between
1993 and 2001.
EXHIBIT 8 & 9 HERE
Despite increases in credit card and transaction numbers, the average number
of annual transactions per credit card fell in 2000 whereas the average annual
spend per credit cardholder went up. These trends sat alongside a switch in
individual expenditure patterns moving from cash transactions to credit cards.
Also, multiple card holding became an important feature of the UK cards
industry, with over 50 per cent of all cardholders having two or more credit cards
(and 5 per cent six or more!). However, there was still long way to go for the
‘cashless society’: for instance, only 4 per cent of all payments were made by
credit cards in the UK, compared with 25 per cent in the US. Industry estimates
elaborated by APACS projected that by 2011 half of the adult UK population
(expected to be 26 million cardholders) would be regular credit card users,
compared to 18 million regular users in 2001.
The use of debit and credit cards, however, showed significant differences
between North America and Europe. The US accounted for 40 per cent of the
cards issued and a massive £340 billion credit card spending in 1995 whereas
the same figure in the UK and Italy was £44 billion and £6 billion respectively.
The potential for growth in continental European markets was also highlighted by
figures from the Credit Card Research Group showing that credit card payments
in 1997 in the UK were equivalent to 8.5 per cent of GDP while in France,
Germany and Italy the equivalent figure was 1 per cent.
Seeking to capitalise on that business opportunity, Barclaycard grew
internationally. Barclaycard entered several new geographical markets including
Germany, Greece, France, Italy and Spain. Cross-border growth resulted in an
9
10. increase of 1.3 million credit cards by 2002. In spite of business in continental
Europe growing by 10 per cent per annum, in 2002, as a business unit,
continental Europe and Africa recorded an operating loss of £13 million, this
followed a loss of £20 million in 2001. Peter Crook, the UK managing director,
attributed such losses to the cost entailed in setting up businesses in new
territories; noting that it takes 4 to 5 years for new entrants to reach the break
even point in the mature UK market, and it would take even longer in more the
challenging environment of less developed markets.
The next factor that allowed Barclaycard to remain the leader in the UK was
linked to the growth of the Visa network, whose UK franchise was exclusively
enjoyed by Barclaycard in the early years. By 2000, Visa secured its position as
the world's most widely used plastic card accounting for US$1.9 billion of
transaction volume or 60 per cent of the global market. Yet, Visa itself did not
seem much satisfied with this outcome. A senior executive at Visa International
expressed their ambition in this respect as: 'When I can go out of a hotel and tip
the porter using a Visa card and he’ll accept it, that’s when we’ll have
succeeded.'
Another factor was the ability of Barclaycard’s managers to avoid price
competition – that is until recently - by emphasising brand and product
development. The introduction of gold cards represented a good example of
how Barclaycard articulated their branding policy. Although MasterCard
introduced their gold card in the US in 1981 and by 1992 there were similar
offerings in the UK (such as those supplied by American Express or the Co-
operative Bank), Barclaycard introduced its Barclaycard Gold until 1995 but
immediately acquired 90,000 Gold customers. The launch pushed its market
share to 30 per cent of total new credit cards issued. The gold card also aimed
to segment its customer base and to customise card features. Apart from
pricing, non-price features such as extended purchase warranties, purchase
protection insurance and travel accident cover were also rearranged according
to the customer segment. Exhibit 10 shows features of Barclaycard's classic and
gold cards in comparison with those offered by other major issuers.
EXHIBIT 10 HERE
Alongside the emergence of gold cards affinity and co-branded cards also
gained popularity in the UK as had been the case in the US. Loyalty schemes
such as National Westminster Bank’s air miles, HFC Bank’s GM card and
Barclaycard’s ventures with Cellnet, Eastern Electricity and Natural Gas resulted
in rapid growth of the customer base but also having to share revenues with
participants in the affinity group.
Exhibit 11 summarises the major new players in the UK market during the last
decade. The entrance of new players into the UK was followed by a change in
Barclaycard’s pricing policy. Historically, Barclaycard had been priced at a
premium and Barclaycard managers had avoided confronting competitors
through low price (or low interest rate) offerings. However, in late 2001
Barclaycard became one of the last traditional players in the market to scrap its
10
11. annual fee, whereas its main rivals (such as National Westminster, Lloyds TSB
and Bank of Scotland) had abolished annual fees as early as 1999.
EXHIBIT 11 HERE
Card issuers (and banks in particular) realised that the same technology that
supported retail credit cards could also support business to business
transactions. Europay estimated that in the 1990s European businesses spent
£100 billion per year on routine business expenses, which were paid mostly by
cash or cheque. Corporate cards offered a cost-effective alternative to such
transactions as the technology was already in place to provide detailed reports
and cost centre consolidation for travel and subsistence costs. The same was
true for company procurement. American Express launched their Corporate
Purchasing Card in the US in 1993 and in 1995 in the UK, while Visa
International introduced their corporate purchasing system to the European
market in 1994. Purchasing cards were attractive to business organisations by
allowing paperless 'order to payment' purchasing, itemised transaction reports
as well as consolidated reports by employee, supplier or purchase category.
In the late 1990s, Barclays introduced both company charge cards and
purchasing cards under the Visa-marqued Company Barclaycard. In a relatively
short period of time, Barclaycard gained market leadership in corporate charge
cards in the UK. Four Barclaycard corporate cards, all Visa marqued, offered a
combination of travel discounts and insurance, extended purchase warranties
and supplier discounts as well as providing detailed reports. Again Visa
marqued Company Barclaycard Purchasing Card allowed customers to
nominate a monthly statement date and provided opportunities to extend credit
as well as detailed reports. Barclaycard's leading position in this market was
underlined by their success in securing the account for a Government
Procurement Card with variants provided to the Ministry of Defence, Customs
and Excise, the Ministry of Agriculture Fisheries and Food and the Environment
Agency.
Marketing has traditionally been an area where the management team at
Barclaycard invested heavily. Indeed, to sustain its position extensive advertising
and promotion campaigns were launched. For example, in 1995 and 1996
Barclaycard spent over £12 million on advertising compared with National
Westminster’s £1.5 million and American Express's £3 million. As a result,
Barclaycard was the most recognised financial brand in the UK. Shaun Powell,
a commercial director of Barclaycard, was typically opposed to anything that
would dilute Barclaycard’s brand: ‘…branding is a discipline, it is all about
sustaining your premium price.’
Few in the UK will not be familiar with the long-running television advertisement
series featuring Rowan Atkinson (a.k.a. Mr Bean) playing the role of an accident
prone diplomat, which even lead to a Hollywood movie! The message in the
advertising encapsulated the essence of Barclaycard's strategy and how it
planned to differentiate itself from competitors. The advertisements emphasised
peace of mind - in case of an emergency such as losing the credit card or
11
12. passport, experiencing medical problems while on holiday or losing goods
purchased with Barclaycard. By 2003 marketing was directed into sponsorship
which included six key areas, namely education, the disadvantaged, people with
disabilities, the arts, the environment (through the Young People's Trust for the
Environment) and a three year sponsorship of the English Football Association's
Premiership League. Yet, as illustrated in Exhibit 12, Barclaycard was having
difficulty in keeping a differentiated offering in the debit and credit card market:
the four biggest card issuers accounted for nearly three quarters of the cardbase
in 1993 while their share fell to 50 per cent in 2001, with Barclaycard falling from
almost 30 per cent in 1993 to 18 per cent of the market share in 2001.
EXHIBIT 12 HERE
Until 2002 Barclaycard had developed its customer base through a combination
of organic growth and alliances. These alliances included companies in
telecommunications such as BT and Cellnet and food retailers such as Marks &
Spencer and Sainsbury’s. Managers of Barclaycard, however, abandoned plans
to develop its own loyalty scheme when Barclaycard aimed to differentiate itself
from its competitors by establishing Nectar in conjunction with Sainsbury (food
retailer), Debenhams (department store) and BP (retail petrol) late in 2002.
Within a year Nectar became the biggest loyalty scheme in the UK with over 12
million active users. New partners were quickly added such as Vodafone
(mobile telephony), First Quench (retail wine merchants) and Adams (children
clothes retailing).
Alliances, however, were unable to stop a significant dilution of Barclaycard's
market share. Also in 2002, Barclaycard performed its first ever acquisition with
the purchase of the UK operations of Providian (the 8th largest credit card
provider in the US in terms of assets). The acquisition helped Barclaycard enter
a new market segment (that of lower income customers) and brought with it half
a million new customers with balances of around £400 million, that is, a 14 per
cent increase in interest income, 6 per cent increase in provisions and 9 per
cent increase in credit balances. Moreover, the newly acquired expertise in the
low income segment encouraged Barclaycard to agree with Littlewoods Ltd (a
leading retailer in the low income market) the supply of credit cards and other
financial products to Littlewoods' customer base. After Providian, in May 2003
Barclaycard also acquired the point of sale business of Clydesdale Financial
Services, further enhancing its merchant network.
WHITE PAPER OR WHITEWASH?
When the government introduced its 'white paper' on credit card borrowing in
2003, Barclaycard was criticised by the Office of Fair Trading after advertising a
'zero per cent forever' card deal which was nothing of the kind. Customers
actually had to pay off existing balances first before they could get the offer.
There was thus support for claims of a whitewash in the credit card industry:
issuers included 'hidden' charges (levied for late payment or early repayment)
that consumers were often not aware of.
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13. This was worrying as consumer debt had mushroomed from £429 million in
1969 (equivalent to £5.25 billion in 2003) to £168 billion in 2003. A poll by Mori
said that 76 per cent of people found consumer credit advertising confusing and
84 per cent found the language of the paperwork unintelligible. The poll also
found the term APR, used by credit card providers and other loan companies to
describe the rate of repayment, confusing (while 59 per cent would not describe
APR as an annual percentage rate). At the same time, 83 percent of consumers
would look at the APR when deciding which of the 1,300 credits cards in the UK
to apply for.
Ministers ruled out any cap on interest rates for credit cards, relying on consumer
pressure to reduce rates. Checks on companies applying for credit licenses
were to be tightened up. New fines were introduced as well as new powers for
regulators. Ministers were to pressure for a reduction in interchange fees and
consultants at PricewaterhouseCoopers expected the move would cost to the
industry over £450 million in lost revenue per year. Some feared this would lead
to higher charges for credit card issuers and fewer reward programmes for
consumers.
The same day the white paper was published, concerns for Barclaycard were
also prompt in-house: John Varley, Finance Director of the Barclays Group and
heir apparent to Matt Barrett, put investors on edge by warning of the risks
further interest rate increases posed to Britain's debt-saddled consumers.
Developments in the UK were worrying for managers at Barclaycard, particularly
as other European countries were contemplating regulatory changes along the
lines of those in the UK. Managers wondered whether these developments might
result in return to cash-only transactions and thus, would they be beheading of
the king of plastic?
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