Untapped Niches Remain for Affinity Credit Cards

A new report from Packaged Facts exploring the Co-Branded and Affinity Credit Card Market in the U.S. reveals that ethnic groups and the "unbanked" are two areas that show potential for growth.

Dual cards, meaning those that act as both a store credit card and a Visa or MasterCard, are also a new trend area with room for growth, says Therese R. Revesz, principal at Kentera Associates LLC and the author of the report.

Another area with a huge potential for growth are small businesses, Revesz tells Marketing Daily. Small businesses in the U.S. spend about $4.8 trillion on products and services and only 6% of that is transacted using credit or debit cards, she says.

The report, from Rockville, Md.-based Packaged Facts, a division of Market Research Group, estimates that by the end of 2006, U.S. consumers carried more than 320 million co-branded and affinity credit cards, up from the publisher estimate of 212.1 million in 2003. Consumers used them in at least 9.4 billion transactions worth at least $849 billion.



In order for current affinity card programs to continue to grow, the companies must treat them as a partnership, Revesz says. Both the bank and the co-branding partner each needs to benefit. "They also need to refresh the program periodically so that consumers have a reason to keep the card in the front of their wallet and it's in the front of their consciousness," she says.

The report provides an overview of the major market players; a survey of recent and ongoing litigation and regulation of the market; and market share of major issuers, as well as leading growth and marketing trends and an examination of their latest co-brand products and technology, particularly contactless technology.

Competitive profiles of the major card associations and top card issuers provide insight into their recent activities and future plans, while data from Simmons Market Research Bureau paints a picture of card users, from demographics to opinions to card usage rates.

The information in the report is based on both primary and secondary research. Primary research involved extensive interviews with senior marketing, public relations and industry executives within the banking, retail and credit card markets and consultants to the industry, including American Express, MasterCard, Visa, JPMorgan Chase, Edgar, Dunn & Company, Advantage Consulting, Auriemma Consulting, Entadem, Maritz Loyalty, the Nilson Report, Strategic Planning & Marketing (U.K.) and Synergistics Research Corp.

Secondary research entailed data-gathering from relevant trade, business, and government sources, including company literature, annual reports and 10(k) filings, white papers, and data from databases such as CardData, CardLine, Colloquy and The Wise Marketer. Permission was also granted to use data from The Nilson Report, one of the mostly widely read and respected publications in the credit card industry.

Consumer data was obtained from Simmons Market Research Bureau's Fall 2006 National Consumer Study. Media spending data was obtained from TNS Media Intelligence.

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