U.S. credit card market saturation
The United States consumer is drowning in a sea of credit cards. The U.S. credit card market is so saturated that the average cardholder carries four pieces of plastic.
Everyone who wants or qualifies for a bank card already has several. The only market left, in the U.S., for the bank and travel and entertainment (T&E) companies is to move cardholders up to the prestigious Gold and Platinum Cards.
When the cost of finding a new customer to accept a bank card moved to $40, U.S. companies decided it was time to concentrate in a more profitable area, the issuing of foreign credit cards. Credit card issuers are fighting to conquer their fair share of foreign markets.
The foreign markets
Foreign markets are the last frontier available for American Express, Visa, MasterCard and Diners Club (Carte Blanche was never mentioned in all my research sources). The battle is now on to determine which card issuer will ultimately control the world credit card market.
There are slightly more than 2.8 billion (2021 figure) credit cards in circulation around the world. About 1.1 billion (2022 figure) are in the US, 638 million in the E.U. (2021 figure), and 295 million in Japan (2021 figure).
That means just under half of all the credit cards issued in the world are issued in the U.S.
The early battle for the Japanese market
The greatest struggle for market share took place in Japan. Japan was considered the biggest and most lucrative market. The Japanese were first introduced to U.S. cards in the late 1970s. Until that time, credit cards were looked upon as something that only people who were too poor to pay cash used. The attitude of the Japanese changed in just a few years so that now credit cards are a status symbol.
Credit cards are one of the few items the United States manufactures that is able to penetrate the Japanese market. MasterCard did the best job by issuing 28 million cards. MasterCard dominates Visa by running a 50% larger market share. American Express and Diners Club cards issued are about equal. When American Express first started marketing in Japan they had an identity problem. The Japanese thought they were a transportation company.
American Express first issued its Gold Card in Japan in 1980. Now it’s shifting its marketing to the Green Card, which was first issued in 1983. American Express considers Japan its biggest foreign growth market, with membership doubling every 18 months.
Japanese bank cards
There are now millions of Japanese bank cards in circulation issued with an annual fee.
The total number of credit cards in circulation in Japan was 24 million in 1979. By 1985 the number had grown to 85 million. There are expected to be 150 million in use by 1990 – and today (2021) there are 295 million. It’s growth like this that is causing U.S. card issuers to seek out new foreign markets.
The European market
Another important area the U.S. companies were competing for was the European market. Europeans used to pay for fewer than 5% of their purchases with credit cards, while Americans used plastic 25% of the time. Currently, Visa is the leading foreign bank card in Europe.
MasterCard: first in China
In Asia, China is in an interesting situation. The first credit card issued in China is MasterCard. It was first issued in September of 1985 and currently has only a few thousand cardholders in a land of one billion people.
Find out more about collecting credit cards.
Copyright 1987 by Greg Tunks
