The Credit Card Industry’s Money Problem Can Be Your Money Solution | Canadian Merchant Account

Oct 23, 2014
Private-Label-Credit-Card-Industry-ThrivesAccording to Credit Union Magazine, the credit card industry in the United States and Canada is at a cross roads. With profits falling and charge offs soaring, the industry that once raked in billions must now deal with a society that feeds on credit, but does not have the same ability to pay off debt as before. Not only does the credit card industry have to battle recession, but they also must find an effective strategy to join or fight the lure of alternative payment methods.

Long before the lust for profits and plastic supremacy overtook the credit card industry, credit was reserved for only the most responsible bank customers, however this philosophy only returned modest revenues to banks. Today, even the most irresponsible consumers with poor credit histories can procure a credit card. In fact, banks target young adults with little to no credit histories to offer them credit cards with introductory offers but high interest rates.

Unfortunately, the recent recession has turned the tables on this practice. As consumers became strapped for cash, their credit card use drastically increased, but so did their tendency to not pay their credit card bills. The “Big Three” issuers (Chase, Bank of America, and Citibank) account for more than 63% of all credit card debt, and now the perception of credit cards has turned from an easy source of credit, to an interest trap.

Not only does the credit industry face plummeting consumer confidence, it also has competitors eating away at its customer base. Alternative payment methods like bitcoin and digital wallets have the potential to be friend or foe, depending on how consumers decide to utilize the technologies (banks are hoping consumers charge items purchased with digital wallets instead of using debit). As consumer confidence in plastic wins, it’s important for high risk merchants in the U.S. and Canada to prepare to accept alternative payments or credit card payments. Now your high risk Canadian merchant account can be configured and monitored by alternative payment professionals who know the ins and outs of payment processing.

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