AmEx leapfrogs MasterCard to become No. 2 credit card brand
Do you remember a time when MasterCard was called MasterCharge? If so, you can also remember the last time that the company was smaller than American Express. That was back in the 1960s, but 2011 saw — at least by some measures — the old order restored.
That year, according to The Nilson Report’s February edition, American Express overtook MasterCard to become the second-biggest credit card brand behind Visa when judged by the value of spending at merchants.
MasterCard still flourishing
If you have shares in MasterCard, you may now be panicking. Don’t! If you add the purchase volumes of the company’s general purchase debit and credit cards together, it’s still way in front of American Express. By that measure, the market shares are:
- Visa: 56.7 percent
- MasterCard 25.1 percent
- AmEx 15.0 percent
- Discover 3.2 percent
It’s only if you break out the purchase volume of general purpose credit cards alone that the market-share picture changes:
- Visa: 43.3 percent
- AmEx: 26.3 percent
- MasterCard 24.8 percent
- Discover 5.6 percent
Even then, it’s not entirely clear to this blogger whether Nilson counted American Express’s charge card transactions (which are numerous) as credit card transactions. In many essential ways, charge cards (where you have to zero your balance each month) have more in common with debit cards than credit products.
American Express’s explosive growth
MasterCard’s debit card business grew strongly in 2011, up a remarkable 17.1 percent, which compares well with Visa’s 9.3 percent. However, the former’s credit card growth (all these figures are by payment volume at merchants) was a creditable but less impressive 6.1 percent, which doesn’t look so hot alongside Visa’s 9.7 percent. And it looks positively lame against American Express’s 13.4 percent. It’s AmEx’s sudden growth spurt that’s making MasterCard’s credit card business look weak.
The headline that AmEx has become the nation’s number-two credit card brand is likely to be deeply unpopular at MasterCard headquarters. It may be true, but it hardly reflects fairly the health of the company’s business. Three other — more positive — statistics contained in The Nilson Report may give some comfort to frazzled executives:
- The number of MasterCard-branded credit cards in circulation soared by 5 million in 2011. AmEx added a more modest 1.7 million, while Visa saw a whopping drop of 5.9 million.
- MasterCard cards accounted for 6.1 billion transactions in 2011, while AmEx cards were used 3.8 billion times. The dollar values for the latter were obviously higher.
- In terms of outstanding credit card debt, MasterCard retains its number-two slot by a wide margin. In billions of dollars, here are the brands’ 2011 “outstandings:”
- Visa: $330.45
- MasterCard: $236.40
- American Express: $94.70
- Discover: $51.71
Perhaps we’re still a ways off from a real return to the rankings of the 1960s.
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