New Innovations—Including Crypto Cards—Energizing The ‘Dying’ Credit Card Market


Every once in a while, one financial services observer or another proclaims the death of the cards. In April 2013, Motley Fool, in an article entitled The Slow Death of Credit Cards stated:

“The good news is that Americans are giving up on one of the most ruthless destroyers of wealth known to digital challenges: credit cards. These days we’re more interested in debit cards. Old-fashioned American consumerism built on debt , may be coming to an end. Goodbye, credit cards. “

In December 2017, CNBC spoke of “the age of credit cards may be coming to an end, and that’s good” and added:

“Admittedly, there are some problems inherent in credit cards. The most striking of these is that credit cards are often not 100 percent secure. Users face problems ranging from hackers and fraud to lost and stolen cards.

As if that wasn’t a problem with cash. And who would dream of writing a fraudulent check?

Meanwhile, in the six years since the publication of the Motley Fool article, credit card debt has grown by 50% to $ 930 billion by the end of 2019.

Both for the “end of American consumerism.”

Credit card volume is charging ahead in 2022

Fast forward to 2022, and major credit card issuers such as Chase, Citi and Wells Fargo are seeing strong growth in credit card volume. In the first quarter of 2022, the volume of the three issuers grew by 29%, 24% and 33% year-on-year, respectively.

JPMorgan’s CFO attributed the growth, in part, to a “acceleration” in travel and entertainment spending. According to eMarketer:

“The multitude of new and refurbished card products that have recently hit the market should help issuers maintain volume through the spring and summer months, especially cards that include T&E-focused rewards: Chase, for example, recently launched IHG Rewards Premier Business upgraded IHG Rewards Traveler and Premier branded and shared branded consumer card.

Young consumers are pushing the credit card boom

Many people mistakenly believe that older consumers are driving the growth of card volume. Not that much.

According to a recent consumer study by Cornerstone Advisors, 65% of Gen Zers (ages 21 to 26) and 67% of Millennials (ages 27 to 41) have at least one credit card. It is not surprising or out of line with other studies.

But the Cornerstone study found that among Gen Zers, Millennials, and Xers with at least one credit card, members of those generations spend, on average, 47% of their monthly expenses (excluding bills) on a credit card.

3 Innovations that rejuvenate the credit card market

While major issuers are trying to outperform each other in reward levels, it is worth noting some new entries in the credit card market:

1) Curve

Curve adds multiple payment cards, allowing its users to make payments and withdrawals from a single card. Users link their debit and credit cards to the Curve card and can set a default card from which to make payments or set rules for assigning certain types of payments to certain cards.

Curve also allows users to change the card with which they paid after a transaction is completed, as long as it is within the payment cycle.

According to Cornerstone Advisors research, among consumers with a credit card, half of Gen Zers, 57% of Millennials, and nearly two-thirds of Xers have two or more credit cards.

Added to this is the fact that 35% of Generation Zer, four out of 10 Millennials, and one-third of Generation X have two or more checking accounts, each with their own debit card, and the number of payment cards they have. Today’s consumers are really starting to increase. up.

Originally available in the UK, Curve announced its US release in March 2022.

2) Tandym

The concept of trademark credit cards (also known as private label) has been around for a long time, but the economics of the deal make it almost impossible for merchants below a certain size to participate, thanks to the onerous start-up costs.

Enter Tandym.

Tandym makes it easy for merchants with less than $ 1 billion in revenue to offer their own branded or private label cards. Through an API-based direct connection that eliminates intermediaries, Tandym’s core product converts a merchant’s transaction costs into future revenue by diverting processing fees into a customer loyalty program.

With Tandym, merchants of any size can offer a paid product with their own brand and logo throughout their e-commerce experience and allow customers to earn points for future purchases at the merchant.

Founded by the former Capital One


Executives with deep experience in the shared branded credit card space, Tandym will help expand store brand credit to a wider range of consumers and merchants than has been possible so far.

3) Cryptographic cards

Cryptographic debit cards have been on the market for a few years, but now cryptographic credit cards are starting to appear.

According to FXC Intelligence:

“Cryptographic cards come in two main types: cards that convert cryptocurrency into fiat so that it can be used to make a payment, often with additional cryptographic rewards, and fiat-based cards that offer crypto as a payback.”

BlockFI was the first in the U.S. market with a cryptographic credit card in July 2021, offering a 15% cash refund after a 3.5% reward for the first three months. Gemini and Nexus launched their bids in April 2022.

Many credit cards (both credit and debit) require their cardholders to maintain a cryptocurrency balance with the issuer. With the Nexo card, for example, cardholders use their cryptocurrency assets to open a line of credit and make purchases in fiat currencies while using their cryptocurrency holdings as collateral, according to FXC Intelligence.

Neither Gemini nor BlockFI cards charge transaction fees, but with the Nexo card, FX fees come in after a certain amount of transactions.

The death of credit cards is a wish

There is a segment of the population that wants credit cards to disappear, and jump on any negative change in the credit card market as evidence of the declining and imminent death of credit cards.

It’s just not realistic thinking.

The use of physical cards may slow down, but there is simply too much credit supply and demand in the market. In fact, the Nilson Report projects that the volume of credit card purchases in the U.S. UU. it will grow by 39% between 2021 and 2026, and outstanding balances will increase by 35% over the same period.

And as the latest Fed data shows, buying and paying debt now (BNPL) is an additive to credit card debt, not a substitute. So how will BNPL suppliers grow? By offering a broader line of credit offers (i.e., credit cards) as you increase the responsible use of credit by young and thin consumers.

Add new innovative offerings from Curve, Tandym, and companies that offer cryptographic credit cards, and the future of credit cards has never looked better.

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