Segmenting the U.S. Banks: Focus on Card Issuing and Presence of Acquiring
Within the U.S., 660 bank holding companies associated with regulated depository commercial banks and savings banks exist with $1 billion or more in assets according to data sourced from SNL. These banks engage in a wide spectrum of banking and related services including issuing consumer credit cards and enabling business and commercial banking clients to accept cards (i.e., “acquiring”).
These banks were segmented by total assets as of March 31, 2017. Figure 1 depicts prevalence of consumer credit card programs and merchant acquiring programs among these segments.
Figure 1: U.S. Bank Holding Companies Segmented by Total Asset Range
1 Includes eight banks with reported 1Q 2017 acquiring volume: BB&T, Capital One, Citi, Chase, PNC, TD, U.S. Bank, and Wells Fargo. 2 Includes Amex, Barclays, and Discover. 3 Includes ADS and First National of Omaha.
These banks were further segmented in Figure 2 by (a) those that issue consumer credit cards and acquire; versus (b) those that issue but do NOT acquire to assess any observed differences in growth rates in credit card balances.
Figure 2: Growth Rate in Consumer Credit Card Balances (1Q 2016 to 1Q 2017)
1 Excludes Amex, Barclays, Discover, ADS, BMW, CardWorks (Merrick), TIB, and World’s Foremost Bank (Cabela’s). 2 Excludes Huntington, which did not report acquiring volume in 1Q 2017; but experienced close to a doubling in reported consumer credit card balances year over year.
For banks that issued cards and acquired, growth in credit card balances was observed to be significantly higher overall (+8% versus -7%) and within three of the bank segments: >$200 billion, $100 to 200 billion, and $10 to 30 billion. One may speculate that banks that issue and acquire may be more strategically focused on card payments generally and that certain synergies may exist or be possible between issuing and acquiring lines of business. Looking forward, these synergies could become more prominent as broader forces, such as ecommerce and fintech, have an increasingly pronounced impact on traditional models heretofore deployed for cards-related businesses.
For more information, please contact Frank Martien, Managing Director, email@example.com, specializing in Commercial Payments and Bankcard Issuing.
To read the rest of this article, please subscribe to