Summary
Retailers must focus on selling goods and services and allow the numerous financial institutions to manage credit & debit for the consumers. Closed loop credit is not an impact on net new sales and normally will not drive the large ticket purchases as most consumers do not require more credit in order to make a purchase. There are a myriad of opportunities to offer bank branded cards that provide identity and financial wealth sharing. Uncrowd the market.
Analysis
Retail cards rates much higher than bank backed products. Too many cards and brands chasing too few customers. Cost of operations very high and getting more expensive. Visa & MasterCard interchange fees are cost efficient when used at the most effective means. Co branding best solution. Leverage financial institutions to manage credit and provide full access to their demand deposit accounts. New brands are of no value to the normal retailer including WalMart.
This author consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
