War of the Credit Card Companies
Interesting article here about MasterCard’s woes. Seems the credit card company grew so fast that it is expected to peak soon, analysts say. Of even more interest to me is the fact that American Express has sued MasterCard and Visa for allegedly violating anti-trust laws.
AmEx felt pushed out of the U.S. market and unable to form partnerships with certain banks that had partnered with Visa and MC. One of the banks named in the lawsuit, Bank of America, now issues AmEx cards so I guess times have changed!
Am I the only one with little sympathy for American Express? How much money will be enough? I also have little sympathy for MasterCard and the fact that it only boasts a 30 percent profit margin versus Visa’s 35 percent profit margin. Both are being sued by merchants over the fees they charge, so they have that in common - along with the Amex lawsuit, of course.
The lawsuits are a threat to the financial health of MasterCard, as is the recent damage to the mortgage lending industry that could possibly leak into the credit industry as well, Financial Week speculates. However, this latter threat seems overblown because recent numbers show that the credit card industry is thriving in light of the mortgage crisis, with mortgage lenders happy to feed the credit card frenzy. In fact, homeowners can even charge a mortgage payment now.
Cash cows that they are, the major credit card companies are very tied into our U.S. Economy. In fact, they are one of the cornerstones, as an unfortunate number of Americans rely on credit cards for everyday survival. So here’s hoping the doomsayers are wrong. Here’s hoping AmEx gets a more fair shake. And here’s wishing just as much success when Visa goes public early next year as MasterCard has enjoyed since it did the same 16 months ago. Viva credit.
