Tag Archive for: credit cards

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4 Things You Need to Know About Cryptocurrency Today

(New York, NY) Bitcoin has been around for over a decade but continues to find its footing with consumers less familiar with it. Famously first used to purchase Papa John’s pizza in 2010, the cryptocurrency’s value has grown from $725 in 2015 to over $64,000 as of this writing, creating some investment winners and losers along the way. Auriemma Group’s latest issue of Mobile Pay Tracker investigated consumers’ relationship with Bitcoin and cryptocurrency in general, uncovering who knows about it, who has it, what they’re using it for, how they’d like to use it in the future, and more.

1. Lack of understanding prevents cryptocurrency ubiquity.

Cryptocurrency has captured mainstream attention since its launch, but few consumers truly understand how it works—74% say they are a cryptocurrency novice. While some may be able to speak about it generally, its unlikely your average cryptocurrency holder is explaining the blockchain to their friends. Overall, though, nearly everyone (96%) has at least heard of cryptocurrency, highlighting just how culturally significant it has become during its relatively short tenure.

“As a payments ecosystem, cryptocurrency will need to become more widely understood for it to truly flourish,” says Jaclyn Holmes, Director of Research at Auriemma Group. “But low levels of understanding may be enough for a casual investment, even if the currency is far from becoming the decentralized alternative to cash.”

2. About one-in-six consumers currently own a cryptocurrency.

Age plays a notable role in cryptocurrency ownership, with some Gen X and Baby Boomer consumers likely hesitant to use it as an investment vehicle due to its volatility. With more time to absorb the ebbs and flows of the market and more openness to emerging payment types, Gen Z and Millennial cardholders are more likely to hold cryptocurrency (25%-30%).

“Not only do younger cardholders have the advantage of time when it comes to cryptocurrency investing,” says Holmes. “The group is also generally more open to novel technologies and approaches in the payments space. We’ve seen it with mobile payments, P2P payments, contactless technology, and more.”

Still, without high levels of understanding, 57% of those who own cryptocurrency say it comprises less than one-quarter of their overall savings/investment portfolio. Though thousands of cryptocurrencies are in circulation, Bitcoin, Dogecoin, and Ethereum are the most owned among consumers (7-11%).

3. Those with cryptocurrency want more.

Looking ahead, one-quarter of consumers are interested in buying or receiving cryptocurrency in the next 12 months. This figure increases to 81% among those who currently hold cryptocurrency. Even those who used to hold cryptocurrency show increased interest (49%), which exemplifies the largely positive experience those who have ever held it have had with the product.

“While traditionally bought and sold proactively, we’ve noticed passive opportunities for cryptocurrency acquisition sprouting up across the payments space. Venmo, for example, now allows its users to redeem their funds for Bitcoin, Ethereum, Litecoin, or Bitcoin Cash,” says Holmes. “It wouldn’t be surprising if it became a common redemption option for credit card rewards programs.”

In fact, cryptocurrency as a cash back reward is of interest to one-third of consumers, while those who currently hold cryptocurrency are even more interested (75%). That isn’t to say cryptocurrency rewards will become table stakes, but they could certainly become a program sweetener, particularly for younger cardholders looking for a low-risk way to participate in the space.

4. It’s considered a long-term investment, not liquid funds.

Though cryptocurrency can sometimes appear to be a get-rich-quick scheme, the reality is that those who hold it broadly think of it as a long-term (38%), not a short-term (13%) investment. Still, knowledge remains key. Losing the errant dollar to a defunct cryptocurrency may not change one’s financial future, but an overzealous investor could lose a lot of money quickly, like this Shanghai investor who purchased Squid Game crypto.

“Some consumers simply play around with cryptocurrency to see what happens, but this could become a high-risk endeavor for those offering up their life savings,” says Holmes. “Issuers can play in this space by offering their cardholders the opportunity to buy into cryptocurrency without such a large price tag—using rewards points to purchase smaller portions of trusted cryptocurrency providers.”

Without the infrastructure to accept cryptocurrency as a form of payment at the point-of-sale, it will largely be seen as an investment product. Few (14%) see cryptocurrency as liquid funds for purchases, but if presented with the option to use theirs for a purchase at the point-of-sale, about half are likely.

Why should banks care about cryptocurrency?

While cryptocurrency is still relatively new and transaction volume remains low for the industry, it is undoubtedly a growing space. Those looking to play in the space will need to remain conscious of evolving regulation to ensure compliance needs are met. Still, banks and issuers can act as a refuge for consumers looking to dip their toe in without the exposure that comes with committing their hard-earned dollars to the investment. Providing cardholders the option to earn or redeem their account rewards as cryptocurrency allows them to passively participate in the space in a way that feels lower-risk, particularly for those new and just looking to play around.

Survey Methodology

Mobile Pay Tracker

This Auriemma Group study was conducted online within the US by an independent field service provider on behalf of Auriemma Group (Auriemma) in July 2021 among 2,003 adult mobile pay eligible credit cardholders. The number of interviews completed for both is sufficient to allow for statistical significance testing among sub-groups at the 95% confidence level ±5%, unless otherwise noted. The purpose of the research was not disclosed, nor did respondents know the criteria for qualifying.

About Auriemma Group

For more than 35 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognized experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships, and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximize their performance. Auriemma serves the consumer financial services ecosystem from our offices in New York City and London. For more information, call Jaclyn Holmes at (+1) 646-454-4200.

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Card Benefits May Sweeten Program Offering, But Few Drive Usage

(New York, NY):  With the rewards war in full swing, the sustainability of some benefits has come into question, causing issuers to think critically about what they offer. Recent research from Auriemma Group’s Cardbeat® report identified the most and least important card acquisition drivers, highlighted the benefits that most impact usage, and revealed a general lack of consumer awareness for ancillary benefits. The study discovered that while card benefits may play a key role in acquisition, there is an untapped opportunity to have them more greatly impact card usage.

Glitzy benefits—contactless pay, VIP experiences, cards made from heavier metals—may pique a credit cardholder’s interest, but they are ranked[1] as least important when applying for a new credit card. Pragmatic factors, like no annual fee, rewards that never expire, and ID theft protection, on the other hand, hold the highest importance.

“Nonessential factors should be scrutinized heavily, especially if they are costly to maintain,” says Jaclyn Holmes, Director of Payment Insights at Auriemma. “Benefits that aren’t driving the desired cardholder behavior could be replaced by those that have a greater impact on spend, satisfaction, acquisition, and retention.”

Issuers must balance between benefits cardholders find important at acquisition and those that just sweeten the deal. While the most important benefits could be considered essential to a card program, less important benefits are still nice-to-have. And these nice-to-have benefits should be selected strategically—with an issuer’s target audience in mind.

Card benefits, however, are more than just acquisition drivers; they are an untapped opportunity to complement rewards offerings and can further drive usage. For all 37 benefits tested in the study—including general, experiential, monetary, protection, and travel—most respondents offered them say losing respective benefits would have little to no impact on their card usage. As an example, 65% of respondents said losing VIP experiences would have little to no impact on their card usage; 63% say the same for airport lounge access; and 61% for vacation package discounts.

“Rewards earned for spending on a card, like cashback or points, and redemption options are a key driver to usage,” says Holmes. “Additional program benefits can fortify a card’s value, but losing them would only nominally impact usage.”

And what’s more—as many as 55% of rewards cardholders didn’t know if any of their cards offer one of the benefits tested. So, while benefits may influence card acquisition, the lack of benefit awareness limits the card’s overall value potential and hinders the impact on usage, especially for those who don’t know they have them.

“Issuers should reinforce key card benefits valued by cardholders, especially those with the greatest likelihood to increase spend and loyalty, such as accelerated points earned on spend categories, waived fees on ancillary benefits, statement credits, and no blackout dates for using points,” says Holmes. “By communicating timely reminders in a way that demonstrates how a specific card feature can enhance a cardholder’s experience, issuers can capitalize on the acquisition, usage, and retention gains that its program benefits can provide.”

Survey Methodology

This study was conducted online within the US by an independent field service provider on behalf of Auriemma Consulting Group (Auriemma) in June 2018, among 800 US adults credit cardholders. Respondents were recruited from an independent web panel. The purpose of the research was not disclosed nor did respondents know the criteria for qualifying. The average interview length was 20 minutes.

[1] Cardbeat included maximum differential scaling exercise where 15 benefits were compared to determine the most and least influential factors when applying for a credit card.

 

About Auriemma 

For more than 30 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognized experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships, and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximize their performance. Auriemma serves the consumer financial services ecosystem from our offices in New York City and London. For more information, call Jaclyn Holmes at (212) 323-7000.

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EU Pullbacks Haven’t Axed Rewards Payment Cards—They Still Rule

(London, UK):  One year after the implementation of Interchange Fee Regulation (IFR), the majority of British consumers continue to favor payment cards that reward them with points or miles for their spending, according to recent research by Auriemma Group.  The EU-mandated cap on credit and debit card interchange fees reduced the revenues earned by card issuers, prompting many to scale back their rewards schemes in 2016. Despite these cutbacks, over half of UK credit cardholders in the Auriemma study say they earn rewards for payment card usage, and they respond enthusiastically by concentrating their spending on those cards.

As part of its ongoing UK Cardbeat research, Auriemma surveyed 400 UK adults who own rewards payment cards.  Almost a quarter (23%) reported a change to their rewards programme in the past year—78% of them saying the change decreased the overall value of the card. Still, more than half of that same group say their usage was not affected by these changes, and 82% say a payment card that earns rewards is their most frequently used card.

The most widely held type of rewards payment card is cashback (37%), followed by supermarket (33%), and airline (21%). Despite their smaller market share, airline miles seem to be the most powerful reward, as these cardholders spend more in total and report higher satisfaction overall.

“Airline and hotel rewards are big-ticket and aspirational” noted Marianne Berry, Managing Director of Auriemma’s Payment Insights practice, which conducted the study. “Most consumers who have an airline co-branded card are consciously banking their miles earned toward a free ticket for a vacation or personal travel, so they’re very motivated to use that card to pay for everything.”  On average, cardholders say they need to spend £8,325 to redeem points for a flight, compared to £3,386 for a hotel room.

This perception of rewards’ intrinsic value translates into much more spending. On average airline rewards cardholders spend more per month (£1,182) on their airline rewards cards than retailer/grocery (£606) and cashback (£564) cardholders do on those cards combined. And 62% of their spend is outside the card’s partner brand (vs. 52% retailer/supermarket cards), suggesting a purposeful effort to earn miles with a range of purchase types. They also ascribe a higher value to their airline miles earned. About half (46%) of airline rewards cardholders believe a mile is worth £0.05 or more, while only one-quarter (24%) of their retailer/grocery counterparts believe a point earned is worth the same.

“Ultimately, industries vary in how they structure their rewards payment card programmes,” says Berry. “Those with airline cards spend more and have to wait longer to redeem, while those with retail or grocery cards get more frequent, but lower-value rewards. These rewards schemes appeal to different types of cardholders.”

On February 22, these findings (and more insights on UK rewards payment cards) will be presented by Berry at the 2nd Co-Brand EMEA conference in London, entitled, “Is Your Marketing Bold Enough?” Auriemma’s Director of International Partnerships, David Edwards, will act as Chairman for the event. Those interested can visit www.airlineinformation.org to learn more.

Survey Methodology

This study was conducted online within the UK by an independent field service provider on behalf of Auriemma Consulting Group in September 2016, among 400 adult rewards cardholders. The number of interviews completed on a monthly basis is sufficient to allow for statistical significance testing between sub-groups at the 95% confidence level ± 5%, unless otherwise noted.

About Auriemma Group

Auriemma is a boutique management consulting firm with specialised focus on the Payments and Lending space.  We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines.

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Consumers Prefer PayPal to Banks for Online Checkout and P2P Payments

(New York, NY) PayPal’s clout with consumers is dominating its competition in the alternative payments space, according to recent consumer research by Auriemma Group. The study of 800 US adult credit cardholders took an in-depth look at alternative payment providers, comparing PayPal’s online checkout and P2P offerings to other notable platforms. Consumers responded with a clear preference for PayPal, citing greater familiarity, usage, popularity, and more secure technology than other providers.

“PayPal is doing a lot of things right,” said Jaclyn Holmes, the Auriemma Senior Manager who directed the study. “They are the clear favorite in the online checkout space and have earned a positive reputation with consumers. The PayPal brand is valuable, so much so that just knowing Venmo was a PayPal product increases the likelihood of cardholders using the service.”

When compared with its peers, PayPal is the most recognized and used online checkout service, with 77% of cardholders familiar with the service and 62% of those familiar currently using the service. And PayPal customers are loyal, with 81% preferring it for online transactions, and 79% using it whenever they can. This type of praise is also common for PayPal Me, PayPal’s P2P offering, which is highly favored among consumers who have tried more than one P2P app (42% prefer PayPal Me compared to 19% who prefer their bank’s P2P payment service). Banks, however, do have some strengths when compared to PayPal—notably in direct deposit, ease of accepting payments, card selection and ease of use.

Despite its overall high marks, PayPal fell short of its competition on overall trust with financial information (80% of consumers trust their primary bank; only 55% said the same about PayPal). And the majority of consumers (56%) are generally unwilling to direct deposit money into their PayPal account. There is a nuance, however: While banks win for overall trust, 69% of consumers say they believe PayPal’s technology is better at protecting their financial information.

“Although cardholders’ relationships are deeper with their primary bank than with PayPal, the fact that consumers believe PayPal’s technology is more secure may be problematic for issuers. Consumers expect financial providers to be as savvy as the players in Silicon Valley,” says Holmes. “Until financial institutions are seen as technological equals with PayPal, the brand has a clear advantage in this arena.”

Survey Methodology

The studies were conducted online within the United States by an independent field service provider on behalf of Auriemma Consulting Group in August 2016, among 800 credit card users each (“cardholders”). The number of interviews completed on a monthly basis is sufficient to allow for statistical significance testing between sub-groups at the 95% confidence level ± 5%, unless otherwise noted.

About Auriemma Group

Auriemma is a boutique management consulting firm with specialized focus on the Payments and Lending space.  We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines.

 

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Got Baggage? How Premium Airline Cards Benefit Consumers, Issuers, and Airlines

(New York, NY):  Few topics provoke as much consumer rage as the indignities of air travel.  Along with endless airport security lines and vanishing leg room, add-on fees are a major source of irritation for flyers.  Last year consumers spent a whopping $3.8 billion just on checked baggage fees, according to the Department of Transportation, and another $3 billion for the privilege of changing their flights.

Airline rewards cards, long favored by mileage hoarders, offer a way for consumers to fight back. By selecting the right credit card, savvy travelers can enjoy priority boarding, checked baggage, and make last-minute flight changes without racking up additional charges. And these premium benefits are broadening the appeal of airline rewards cards, according to recent research by Auriemma Group.

“People want to earn free trips: mileage is aspirational,” says Jaclyn Holmes, the Auriemma senior manager who directed the study. “But when it comes to the day-to-day flying experience, benefits like priority boarding or a free checked bag can make all the difference.”  Even consumers who would normally balk at paying an annual fee may change their minds when they consider avoided costs, she noted. “Over half of consumers who carry cards with premium benefits value these privileges more than the miles they earn for spending.”

Premium benefits are important to consumers, but they are important to airlines and issuers as well. Airline rewards cards with these benefits create an opportunity to better connect with the consumer, to provide them with a more positive experience, and to keep them brand loyal.

“Airlines and their card-issuing partners should continue to highlight the core benefits of mileage, how it is earned, and how it can be used,” says Holmes, “but it is equally important to focus on premium benefits offered, as they may be the tipping point in how consumers select their payment method and airline. Airline reward cardholders expect to be earning miles on their spending; to entice them you need to do more, you need to show them that your product will improve their travel experience.”

Survey Methodology

The study was conducted online within the United States by an independent field service provider on behalf of Auriemma Consulting Group in February 2016, among 800 U.S. credit card users (“cardholders”). The number of interviews completed on a monthly basis is sufficient to allow for statistical significance testing between sub-groups at the 95% confidence level ± 5%, unless otherwise noted.

About Auriemma Group

Auriemma is a boutique management consulting firm with specialized focus on the Payments and Lending space.  We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines.  For more information, call (212) 323-7000.

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Auriemma’s UK Roundtables Discuss the Implications of PSD2 as Adoption Date Approaches

(London):  Supranational regulations such as the European Payment Services Directive 2 (PSD2) will burden credit card portfolio profitability and create new risks and opportunities, Auriemma Group said today.

The impact of PSD2 on credit cards and issuers more broadly was at the forefront of the agenda at Auriemma’s first UK Card Finance Roundtable meeting of 2016. The executive group, which convenes Finance Directors, CFOs, & SVPs of Finance and Accounting for leading issuers, meets regularly to discuss key financial management and compliance-related topics. The wide reaching implications of the directive ensures it features across all of Auriemma’s UK roundtables, from our UK Collections and Recoveries Roundtable to UK Customer Service, and is also a focus of discussion at our Fraud Operations Roundtable next month.

PSD2 is set to be one of the most disruptive payment directives ever implemented in the UK, when it is adopted by member states in 2018. While the first iteration of PSD in 2007 aimed to make payments simpler and more efficient across Europe through the creation of the Single Euro Payments Area (SEPA), the implications of PSD2 are far more potent for issuers and payment providers more broadly.

PSD2 will open the payments infrastructure and allow access to consumer account information to market players through the use of Application Programming Interface (API). By facilitating this direct access, API will establish two new roles in the EU payment landscape: Account Information Service Providers (AISPs) and Payment Initiation Service Providers (PISPs).

“Opening the payment landscape presents a unique set of challenges for issuers and card schemes, while presenting retailers and information aggregators such as comparison websites with previously inaccessible data,” said Carina Da Cruz, Director of UK Industry Roundtables at Auriemma.

Practically speaking, a PISP will have the right to initiate payments on behalf of the consumer by establishing a direct connection with the consumer’s bank upon authentication. Consumers will grant a PISP, such as an online retailer, permission to perform a payment transaction directly, thus bypassing multiple traditional payment participants including, most obviously, the merchant acquirer and card scheme. Significantly, this relationship will stay active to facilitate future payments until the consumer removes permission.

Second, AISPs will for the first time provide consumers with an aggregate view of their financial situation by combining multi-institution account information into a single portal. AISPs will have a direct connection with each financial institution and aggregate this information through a single authentication portal. More significantly, with this information AISPs will have the ability to cross-sell consumers more relevant, tailored propositions based on usage data.

The introduction of new players with direct access to consumer data will undoubtedly present significant challenges to issuers by way of lost revenue and increased competition. However, there are significant opportunities for issuers; members of Auriemma’s UK Card Collections and Recoveries Roundtable meeting in February discussed the challenges of obtaining reliable consumer financial information to complete accurate affordability assessments. API could allow issuers to assess debt affordability to a previously unattainable level of accuracy.

“API opens up a host of new opportunities to produce better customer outcomes, and issuers should rightfully be asking the European Commission for greater clarity regarding their ability to access cross institution account information to facilitate this,” said Da Cruz.

At the Auriemma UK Card Fraud Operations Roundtable in April, members will discuss the technical details of implementing new authentication processes mandated by PSD2. Opening the payment landscape to new players will require next generation multi-factor authentication technology to ensure consumers are protected and liability is shared fairly.

“PSD2 will remain front of mind for members across all of our UK roundtables as adoption looms,” said Da Cruz.  “Our model provides the ideal opportunity for market players to discuss the technical detail of the directive and assess the impact on individual portfolios.”

About Auriemma Group

Auriemma is a boutique management consulting firm with specialised focus on the Payments and Lending space. We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines.  For more information, please contact Tom LaMagna at +44 (0) 207 629 0075.

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P2P Payments Used for More Than Check Splitting

(New York, NY): Person-to-person (P2P) payments are increasing in popularity and diversifying in use, with nearly one-third of consumers currently utilizing the service, according to recent research by Auriemma Group. The firm’s latest Cardbeat® surveys, among 800 US credit cardholders, found that users report several practical uses for P2P payments other than just splitting the check—many citing transaction speed and ease of use as reasons for the preference.

Users agree that P2P payment apps make it easier to pay people far away (94% agree), to keep track of money owed to friends and family (81%), and to split checks or bills (80%). “It isn’t just used to pay for your share at dinner anymore,” says Jaclyn Holmes, the Auriemma senior manager who directed the studies. “The ease of paying people far away suggests users may utilize P2P payments as an alternative to sending checks, money transfers, or providing account information to pay for goods or services.” P2P users also seem to enjoy flexibility in how they pay, with nearly one-half of users linking multiple accounts to a P2P app. Most users link credit rather than debit cards to their P2P apps, consistent with consumers’ preference for using credit cards for online purchases.

Among all respondents, familiarity was highest with PayPal Me (27%), Square Cash (17%), and Facebook (14%). While Venmo was the fourth most familiar among cardholders overall (12%), more than a quarter of Millennials (26%) cited familiarity with the brand. Those familiar with a P2P payment app commonly cite online advertising, word of mouth, and social media as how they first heard of the payment platform. “From a marketing standpoint, the very nature of P2P is that it encourages you to promote it to your friends,” said Marianne Berry, Managing Director of Auriemma’s Payment Insights team. “Users, by necessity, often bring other new users with them: more than two-thirds of users under age 35 reported that they’ve encouraged friends to sign up for a specific P2P app.”

These findings are consistent with a recent issue of Auriemma’s The Payments Report, a survey of 500 debit cardholders, which revealed that 85% of those who used at least one P2P payment app/service were at least somewhat likely to recommend the app/service to a friend. The study also found that 38% of the same population have used the service to pay someone other than a friend, suggesting that P2P payments are not simply just for splitting the bill at dinner, but may prove a more useful form of payment for those who prefer the method over cash or checks.

Survey Methodology
The studies were conducted online within the United States by an independent field service provider on behalf of Auriemma Consulting Group in September and November 2015, among 800 credit card users each (“cardholders”). The number of interviews completed on a monthly basis is sufficient to allow for statistical significance testing between sub-groups at the 95% confidence level ± 5%, unless otherwise noted.

About Auriemma Group

Auriemma is a boutique management consulting firm with specialized focus on the Payments and Lending space. We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines.

Complementary to our core consulting business, Auriemma facilitates a series of Industry Roundtable groups focused on a variety of industries in which clients exchange information through activities managed by Auriemma, comparing and analyzing industry practices and benchmarks so that each member can optimize its own performance.

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Auriemma Expects Credit Card Portfolio Values to Trend Lower Over the Next Several Years

(New York, NY):  Auriemma Group, a nationally recognized credit card valuation agent, has identified several factors which it believes will cause credit card valuations to decline.  The drivers of this anticipated reduction in market value are both changes in card business models as well as regulatory and accounting rule changes.  While Auriemma remains bullish on the credit card business over the short – intermediate timeframe, we expect to see the value reductions appearing in earnest by 2017.

Of the threats to the business model for traditional card issuers, Auriemma is focused on the following:

  • The inevitable increase in delinquency and bad debt expense as the business reverts to the long term mean for consumer credit performance
  • The gradual erosion in underwriting discipline which we are anticipating based upon the entrance of new issuers into the subprime arena
  • The change in “lifetime” value of a customer brought about in part by the change in perception about use of credit cards versus debit cards among millennials
  • The proliferation of alternative payment channels which will exert pressure on traditional card income as newer players enter the market and demand revenue participation.

Several of these are long term trends which we have been watching/anticipating and see signs of acceleration.  With regard to the impending regulatory and accounting changes and the anticipated change in market value, Auriemma is focused on the following:

  • FASB’s new methodology for loan loss allocation which we believe will have an exaggerated impact on credit card issuers versus other consumer lenders
  • The changes in both the composition of common equity tier 1 (CET1) capital and in the specific new capital treatment of purchased credit card relationships (PCCR) intangible assets.

Both the anticipated changes to the loan loss reserving methodology and to the new capital treatment for PCCR will result in very significant pressure on regulatory capital for the industry and will likely slow down future portfolio consolidation.  Auriemma’s expectation that market values will decline does not mean the card industry will become unprofitable; rather, the increase in the amount of capital necessary will result in a significantly lower return on equity.

There are multiple strategies that an issuer may pursue to position itself for these challenges.  Such strategies can allow for both aggressive and defensive postures.  Similarly, investors in credit card equities need to understand how their portfolio companies will address these issues.  Auriemma is prepared to assist our clients both in developing strategies and implementing plans to align their goals with the changing environment.

 About Auriemma Consulting Group

 Auriemma is a boutique management consulting firm with specialized focus on the Payments and Lending space. We deliver actionable solutions and insights that add value to our clients’ business activities across a broad set of industry topics and disciplines. Auriemma has been providing credit card portfolio valuations for over two decades and is a nationally recognized valuation agent. For more information, please contact John Costa at (212) 323-7000.

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