In a Maturing U.S. Co-Branded and Affinity Credit Card Market, Growth Remains for Issuers Exploring Untapped Segments and Emerging International Trends

In a saturated U.S. market for co-branded and affinity credit and debit cards, issuers are exploring growth opportunities in relatively untapped segments and are finding inspiration in emerging global trends, according to "Co-Branded and Affinity Credit Cards in the U.S., 3rd Edition," the latest report by leading market research publisher Packaged Facts.

"As the U.S. market matures, issuers have been seeking new growth opportunities in Europe, Asia, and other regions to varying degrees of success," says Don Montuori, publisher of Packaged Facts. "But opportunities still exist in the U.S. market. Growth has arguably slowed, but hasn't stopped."

Two targeted growth segments are healthcare-related cards and chain supermarkets and drug stores. The millions of consumers enrolled in health plans represent a huge potential new audience for co-branded and affinity cards, one that typifies the kind of frequent-usage, benefits-oriented card holders base issuers are seeking.

Supermarket co-branding is widespread in Europe, but has failed to catch on in the U.S. Nevertheless, industry experts cited in the report are confident that the U.S. could learn from the European example and decisively capitalize on the segment within the next five years.

Other potential growth areas are the affluent consumer and the under-banked. Many co-brand programs are generally poised to take advantage of affluent consumers' interest in being engaged in a rewards and loyalty value proposition that is relevant to their lifestyle, though issuers are also researching emerging needs of the affluent in hopes of developing or reshaping programs to surprise, delight and attract different sub-segments.

The under-banked and the unbanked remain a greatly underserved group. 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.

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%.

"Co-Branded and Affinity Credit Cards in the U.S., 3rd Edition" builds on Packaged Facts' 2007 report by exploring how the market and players have changed over the past two years; what new products co-branding partners are offering; which new segments offer the most opportunity; how international markets are evolving; how partners are coping with the world's grim economic realities; and what advice experts have to offer. In addition, the report features the results of Packaged Facts' 2009 proprietary consumer survey, which explores co-branded and affinity card usage, front-of-wallet, most desired card features, channels and card information sources. For further information, please visit: http://www.packagedfacts.com/redirect.asp?progid=76260&productid=1928141

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