Study: Credit Card Issuers Will Find Untapped Segments

credit cards

Although the U.S. market is mature and relatively saturated, co-branded and affinity credit card issuers are finding untapped segments to fuel growth, according to a report from Rockville, Md.-based Packaged Facts, a division of

In the short term, Packaged Facts expects the combination of consumer caution and cutbacks in consumer credit lines and accounts will cause co-branded and affinity card transaction values to dip in 2009, before expanding as the economy recovers.

Ultimately, Packaged Facts projects the compound annual growth rate (CAGR) on transaction values between 2009 and 2012 will approach 5%.

Companies are finding inspiration in emerging global trends, according to "Co-Branded and Affinity Credit Cards in the U.S., 3rd Edition." Two growth segments are health care-related cards and chain supermarkets and drug stores. Millions of consumers enrolled in health plans represent a huge potential new audience for cards, says Packaged Facts Publisher Don Montuori.



"As the U.S. market matures, issuers have been seeking new growth opportunities in Europe, Asia and other regions to varying degrees of success," Montuori says. "But opportunities still exist in the U.S. market. Growth has arguably slowed, but hasn't stopped." Supermarket co-branding is widespread in Europe, but has failed to catch on in the U.S. But industry experts cited in the report are confident that the U.S. could learn from the European example and grow the segment within the next five years.

The under-banked and the unbanked (those without a relationship with a bank) remain a greatly underserved group, according to the report. While issuers are likely to find these consumers less than desirable in the present economy, some experts suggest serving the segment with options such as decoupled debit cards, in which the underlying checking account is separated from the card and the bank assumes some risk.

Data was derived from an online Survey of 2,606 U.S. adults, of which 55% of debit, payment and credit cardholders owned at least one co-branded or affinity card.

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