Credit Card Market Share
Credit cards are one of the most important payment card instruments in the world, the ever-prevalent and highly reliable tool for purchasing goods and services in today’s increasingly cashless world economy. According to the Nilson Report, credit cards are estimated to account for 60% of total global general-purpose payment card spending in 2018, a 24% increase since 2010. Furthermore, the purchasing power of credit cards far exceeds that of its competitors such as debit cards, considering households in the U.S. spent an average of over $12,000 with credit cards in 2018, compared to just under $1,000 with debit cards.
Therefore, understanding the market share of credit card providers is highly relevant to both merchants and consumers. In the U.S. alone, there are over five hundred financial institutions issuing credit cards and collectively the card networks, Visa and Mastercard, make up 8 out of 10 credit cards. Visa and Mastercard have held the top two spots amongst the most popular credit card networks since 2010. Over the past five years, Visa’s market share has steadily increased, while Mastercard’s has slowly decreased over time. In 2018, American Express was the third most popular credit card network, with a market share of just under 8%.
While Visa and Mastercard are undoubtedly the two most-used credit card networks, there are small but significant differences between them. For example, Visa has a higher merchant acceptance rate, with over 24 million merchant locations in the U.S. alone, compared to Mastercard’s 9.7 million. Additionally, Visa has a higher credit limit, offering a maximum limit of $100,000, compared to Mastercard’s $20,000 limit.
Apart from the big two networks, other popular networks and providers include Discover Card, which has a 4% market share, JP Morgan Chase, Citi Bank and Bank of America. Due to the highly competitive nature of the credit card market, card companies have begun to offer attractive sign-up bonuses and rewards programs in order to attract new customers. For example, American Express recently launched a new cashback rewards program while Chase has its own hotel and airline specific rewards system.
As consumers become increasingly aware of the differences between card networks, they are beginning to choose the card networks and providers that offer the best benefits and rewards. For example, Discover is known for offering generous reward programs and has been increasing its market share at a steady rate over the years. The proliferation of credit cards and competition between card networks and providers is a testament to the significance of the credit card market in the world economy, and to the importance of understanding the market share of the different providers.
