It's rare that I'm shocked by anything in the newspaper these days, but I really was struck dumb by something I read in a sidebar in one of the stories on Mastercard's recent IPO.
I'd always laboured under the impression that there wasn't really much of a difference between any of the major credit card companies. I sort of assumed that Visa, Mastercard and American Express trucked along in a blissful oligopoly with each other, never really cannibalizing each other's business.
But this sidebar, which was picked up in most of the dailies, suggests they're not even in the same league as each other. It seems that Amex is far and away the biggest player, with more than $25-billion in revenues last year. Mastercard's 10-K filing shows the company only had a piddling $2.9-billion worth of revenueslast year. And Visa? Don't make me laugh. It's a private company, but reuters claims they only made a little over $1-billion last year. And their other numbers were right on, so I have no reason to doubt this one.
I find that amazing.
Would you have guessed that Amex is more that 25 times bigger than Visa? Because I certainly wouldn't have.
Sunday, May 28, 2006
Pop quiz: who's the biggest credit card company?
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This could be completely wrong, but I'm pretty sure that...
Visa and MC only take a very very small percentage of a transactions interchange points. That percentage is then used for marketing of the "Visa" or "MC" brand. Most of the interchange goes to the issuing bank and the transaction processor. Visa and MC were merely started by many banks as a standardization for credit processing. These banks then compete on service/rates/etc, not the technology.
The Amex corporation actually issues there credit cards (and reaps in the profits of interchange, interest, etc).
A real comparison would include the broken-out revenue of credit card programs at all major banks.
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