Affinity credit cards are the fastest growing type of bank cards in America. And along with their success come many predictions of what lies ahead.
Forecasted growth of affinity cards
One such forecast comes from Betsy Bauer in the U.S. News & World Report. Betsy wrote, “Although these cards account for only about two percent of all credit cards, converts to this new form of painless philanthropy are coming so fast that by the end of the decade some experts predict bank credit cards without a cause will be a lost cause.”
Affinity credit cards are MasterCards and Visas issued by non-profit organizations. Organizations receive a portion of the revenue the cards generate.
Many experts predict the majority of bank credit cards issued in the future will be affinity cards. Initially, this sounds possible when considering their rapid growth and acceptance. Upon deliberation, a couple of questions come to mind.
Thousands of affinity card issuers
The first question concerns the 50,000 MasterCard and Visa issuers in the United States. There are thousands of large and desirable non-profit organizations who can issue affinity credit cards. Unfortunately, thousands of organizations aren’t enough to go around for tens-of-thousands of bank card issuers. What are the issuers that don’t land a non-profit organization’s affinity credit card going to do?
The next question deals with future bank card growth. Whenever a popular new product is initially offered there’s a rapid acceptance and growth period. Then the market reaches a saturation point where the growth slows and sometimes stagnates.
The next credit card market boom
The second question: When affinity credit card growth slows, what’s the next boom area? The bank credit card industry’s future, and the salvation of many issuers, lies in an outgrowth of the affinity card market. An examination of the non-profit organization affinity market will reveal what the next bank card opportunity is.
People generally join a non-profit organization because it has a special meaning to them. Affinity credit cards are issued to capitalize upon this loyalty.
When a non-profit organization issues a bank card it usually does what’s necessary to get members to carry and cherish “The Card”. Organizations subtly pound “pride of the credit card” into members’ heads. One thing done is to make the credit card so attractive that it stands out in the wallet. That’s why many affinity cards carry a full color photo of the group’s favorite concept or love. This special card instantly draws the member’s attention and is therefore the bank card which is pulled out and proudly used.
Issuers need to realize most people are mentally, if not emotionally, attached to these special meaning cards. It’s important for issuers to keep in mind that because of this attachment, many people are saving their expired affinity credit cards.
Issuers expect organizations to create a loyal following for affinity cards. This is so members will renew their credit cards annually. Card issuers shouldn’t totally depend on organizations to build a following for cards. Issuers, on their own, should strive to form a strong user allegiance to their cards.
The way credit card issuers can create this loyalty is to make the card so interesting that cardholders look forward to getting the next one. Most issuers would be proud to have a card where the users are anxiously anticipating the next release. One way of achieving this is to change the picture on the card annually. Create a series of these special meaning cards – a series where the cardholder looks forward to owning each year’s new issue.
Other possible markets
A stumbling block of most institutions is thinking support for bank cards can only come from non-profit organizations. Interest comes from what a card represents, not whether the organization shows a profit or not. One example is the American Numismatic Association’s (ANA) proposed credit card.
The ANA is a non-profit organization with thousands of members. There’s support for their affinity credit card because the organization needs money and has loyal followers. But remember, most people join and support the ANA because of a love of numismatics!
Now examine the numismatic business, Coin World. Coin World is the world’s largest weekly numismatic publication. Most people read Coin World because of a love for coins. There are just as many, if not more, loyal Coin World subscribers as there are ANA members.
Saying a credit card can only be issued profitably to ANA members because it’s a non-profit organization is false. Coin World subscribers can have just as much enthusiasm for a credit card.
Coin World subscribers have a special interest and love for coins, just like ANA members. Transmute the subscribers’ interest and love of coins into enthusiasm for a credit card. This can be accomplished by issuing an annual design change card with pictures of classic numismatic rarities. There will be an interest in the card because it’s a limited edition, annual design change series with pictures of desired and treasured items.
The idea of promoting credit cards in series is easily seen when applied to collectors. Stamp, doll, plate or any collecting specialty can profit from the concept of a limited edition, annual design change series that can be saved.
Specialty cards for other groups
Remember though, series credit cards don’t have to be limited to only collectors. Any group of enthusiasts is a possible market: golfers, hunters, dog lovers, etc.
A person doesn’t have to be a member of a non-profit organization to be an enthusiast and a prospect for an annual specialty credit card series. It’s the love and interest in the subject matter that makes for support. Then creating an interest and love in the enthusiast for the specialty credit card is up to the issuer.
Offsetting additional costs
A limited edition, annual design change, specialty card series has higher production costs than the two year standard credit card program. Here are just a few of the many ways issuers can offset the added expense:
- The specialty card has less marketing expenses since it’s focused on a specific group.
- Free publicity is obtainable for the issuer of a properly planned specialty card series.
- A properly designed and marketed specialty card will generate word-of- mouth advertising.
- A specialty card will pull in a larger percentage of applicants.
- Annual renewals will be maintained at a higher percentage.
- Extra revenue can be generated by selling special interest items exclusively to cardholders.
- An annual, limited edition, specialty card that offers related perks can charge a higher annual fee.
The extra expense in issuing an annual, limited edition, specialty card series is more than offset by the numerous marketing opportunities created.
The future of bank credit card issuers is in their own hands. Those who have foresight can move into the future with confidence. The future is now for bank credit card issuers who market their cards in series.
Copyright Greg Tunks 1988, Credit Card Collector