Credit Card Industry Analysis

Examines the credit card business.

Matthew Retzloff

Reviewed by

Matthew Retzloff

Expertise: Investment Banking | Corporate Development


September 19, 2022

Credit card industry analysis examines the credit card business. It can be used to find out how credit card companies are doing right now and what their newest goods and services are.

The foundation of the credit card industry is ongoing technological and marketing advancements. This has intensified rivalry among credit card providers.

To attract new clients and expand existing clientele, credit card firms invest enormous sums of money in marketing campaigns, as proved by researchers engaged in such analysis.

Credit card industry analyses also talk about how participants are drawn into programs, creative marketing strategies, reward programs, sales, loyalty points, etc.

For example,  effective promotional strategies are being used to entice more clients into the programs, like reward points and a 0% interest rate.

As per credit card industry analysis, credit card issuers rely on intermediaries, like financial institutions, to reach customers directly. Commercial banks like Chase, Capital One, and Citibank have a disproportionate market share for providing cards.

Credit card industry analysis: Market Expansion

As a platform for transactions rather than as a source of credit, these cards are evolving. Many people who once used cards to obtain credit are now regular users who use them to replace cash.

As conveyed in credit card industry analysis research papers, cards are convenient, causing more people to utilize them for transactions. Because users do not need to carry significant amounts of cash to make transactions, cards offer simplicity. 

One can track their expenditure on platforms provided by their card issuer and make necessary adjustments. 

Credit card industry analysis is on the rise once more, following a decline during the recession of 2007–2008, with new card issuers joining the market each year with cutting-edge new offerings.

With the typical consumer possessing three or more cards today, the overwhelming majority of cardholders regularly utilize their cards to make purchases.

The analysis shows that cards are becoming less of a source of credit and more of a value-based instrument.

More clients are utilizing cards as a value-based medium due to convenience. Cards provide noteworthy comfort since clients don't have to carry huge bundles of cash to pay for things.

Credit card firms have begun offering platforms where one can track their investing and alter their investing appropriately. Be that as it may, cards come with restrictions, and they expose their owners to the possibility of extortion and identity theft.

After encountering a downturn amid the 2007/2008 recession, credit card industry analysis utilizes the ‘developing in notoriety’ metric once more, with modern card backers advertising new innovative items each year. 

Taking credit card industry analysis into consideration, the lion's share of card clients routinely utilize cards to perform online exchanges, with the normal client owning at least three cards.

Market Gaps

The credit card industry analysis of the compensation system introduced a few years ago continues to reflect the highest market prospects.

By figuring out how to keep customers and draw in new ones, the compensation system significantly contributes to the expansion of such companies.

These systems provide bonus features that can vary from organization to organization. This incentive or compensation can take the shape of a welcome offer, 0% interest for a predetermined duration, or lower expenses for a period.

Additionally, the chance to enhance the experience for customers is enormous. Consumer-friendly communications, in the opinion of the majority of customers, still need development.

The analysis also shows that revelations, reward program clarification, forfeiture, and termination announcements are a few areas that might be upgraded. Improved client relations will come from effective communication.

The greatest openings in the industry still focus on incentive frameworks.

The analysis also shows that, to an expansive degree, incentive frameworks boost the development of the credit industry by finding ways of holding clients and drawing in new ones. 

These incentives may take the form of welcome rewards, zero-interest loans for a certain period, and decreased costs for fast repayments.

There are still many opportunities open in the area of client encounters as the majority of clients feel that there's room for advancement in consumer-friendly communications, according to credit card industry analysis.

A few of the zones that can be improved include:

  • The clarity in rewards advancements

  • Relinquishment

  • Close communication 

Viable communication methods will drastically improve client encounters.

Charges Associated with Credit Cards

The owners of cards are responsible for paying interest accrues, operational costs, taxation, as well as other expenditures.

When a user sends money abroad from the country of issuance, foreign trading fees could be assessed. 

Credit card customers must be informed of all fees connected with using a particular card, and the issuer is expected to provide complete transparency. 

One of the highest costs of owning a card is interest rates, which account for the largest portion of the costs levied on cards. The balance on the card at any given time is subject to an interest rate.

Because of this, cardholders with rolling debts must pay high-interest rates on their balances, whereas those with a credit of zero pay no interest on their card until they add to it.

If the cardholder makes a payment beyond the due date, the card company will also assess a late payment fee. If a cardholder makes purchases that are more expensive than their credit limit, an over-the-limit fee could also be assessed.

By defining the prerequisites that must be met before fees can be levied on customers, regulators that supervise the card industry exercise control over the costs imposed on consumers.

Buy now, pay later (BNPL) options, which allow customers to divide their purchases into many installments, are now being offered by many companies. With a BNPL card, customers can make additional interest-free payments on any kind of purchase.

Some consumers prefer credit choices over other payment methods because of the ease of the credit solution. 

With more and more cutting-edge capabilities introduced to cards, driving the payments industry, consumers can use these tools for purposes other than merely making payments.

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Researched and authored by Drishti Kohli | LinkedIn

Reviewed and edited by James Fazeli-SinakiLinkedIn

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