The Canadian Credit Card Market: Tough Sledding published by Mercator Advisory Group, Inc. in August, 2010. This report consists of 27 pages and the price starts from US $ 2950.
Abstract
Research Describes Challenges in the Canadian Credit Card Issuing Market
Boston, MA -- The credit card market in Canada has long been the focus
of intense competition among the leading Canadian banks, with the plethora of
reward programs providing evidence of their non-stop battle to motivate usage.
In the harsher current economic climate, have they perhaps overdone it?
Mercator Advisory Group's new report “The Canadian Credit Card
Market: Tough Sledding” examines the relative positioning in Canada
of the major card networks, and takes a closer look at the activities of the
top 15-20 card issuers. We examine the strategies intended to increase card
account numbers, as well as those intended to increase utilization rates on
cards outstanding.
“The events of the past year have significantly unsettled the credit
card market in Canada. The level of competition for customer accounts has been
increased by both new entrants and the legalization of dual network-branded
issuing. At the same time, the economic recession is driving up household debt
levels as well as card delinquencies and write-offs. Factoring in the cost of
rewards programs, some card issuers will struggle to preserve profitability in
the near term,” states Patricia McGinnis, Director in Mercator
Advisory Group's Banking Group.
Highlights of this report include:
- The “Big Five” Canadian banks hold leadership positions in
this market, but they continue to be challenged by second tier domestic
financial firms, by the Canadian subsidiaries of major foreign banks, and by
card market entrants from the retail sector, including most recently the new
Walmart Bank Canada.
- To preserve profitability and avoid excessive losses in the current
macro-economic environment, lenders must recalibrate most existing credit
models and develop new strategies to respond to credit deterioration.
- Dual-issuing is now allowed, and some issuers are already taking the bait.
In a market already so saturated, we do not believe that simply issuing a new
card of the "other" network will significantly change market positioning.
- Among the leading Canadian banks, CIBC has built a volume of business
significantly more than proportional to the bank's asset size in its market.
One of 12 exhibits in this report:
This report is 27 pages long and has 12 exhibits.
Companies mentioned in this report include: Bank of Montreal, Bank of
Nova Scotia, Canadian Imperial Bank of Commerce, Citibank, Royal Bank of
Canada, TD Canada Trust, Davis & Henderson, Ernex Marketing Technologies,
Groupe Aeroplan, Loyalty One, Total Systems.
Table of Contents
- Introduction
- Overview of the Canadian Credit Card Market
- Shares of Credit Card Network Brands
- The Credit Card Issuers
- Issuer Strategies For Attracting New Accounts
- Rewards Programs of Multiple Types Drive Utilization
- Current Positioning Of Issuers
- Increasing Utilization Introduces Greater Risks
- Card Issuer Technology
- Near Term, This Market Will Be Challenging
TABLE OF FIGURES
- Figure 1: Interac Debit Is The Card Canadians Use Most
- Figure 2: Debit Accounted For Only 35% of 2009 Total Purchases Of US$410
Billion
- Figure 3: Credit Card Utilization Slowed in 2009
- Figure 4: Cards Support Highest Value of Transactions
- Figure 5: CIBC, RBC, and BMO Lead in Credit Card Activity
- Figure 6: Regular Interest Rate Cards Dominate: Low Rate Offerings Target
Those Who Often Carry Balances
- Figure 7: 28 Lenders Offer From 1 to 17 Card Types
- Figure 8: Leading Canadian Banks Offer Multiple, Higher Fee Premium Cards
with Reward and Loyalty Programs
- Figure 9: Four Issuers Offering Most Reward Options Lead in Utilization,
Although Others Have More Accounts
- Figure 10: Relative To Its Size, CIBC Leads the Pack in Credit Card
Transaction Volume By A Substantial Margin
- Figure 11: Visa and MC Combined Loss Rates Climbed in 2009
- Figure 12: Canadian Households Continue to Experience Financial Stress
