As the major players in the credit card industry continue to jockey for market dominance, it is likely additional mergers will be on the horizon.
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Credit card issuers are an exclusive bunch, with a relatively small number of names dominating what is a major industry. One of the main reasons for this is the consolidation that has joined once-separate credit card issuers. Recent history reflects this. In 1990, the top 10 general purpose-card issuers held 56.5 percent of the market. By 2004, the top 10 saw their market share leap to an estimated 89.5 percent, with Visa and MasterCard together holding about 70 percent of the credit card market.
Last year’s merger involving Bank of America made the nation’s third-largest bank also its largest credit card issuer, with 40 million active accounts containing $143 billion in outstanding balances, as of 2005. Chase, Citi, Capital One and Discover round out the top five rankings within the industry.
Figures from the end of fiscal 2004 showed Visa holding 39.8 percent of the U.S. credit card market with $526.87 billion in purchases and cash advances, MasterCard with 30.2 percent of the market share and $399.90 billion, American Express with 23 percent and $304.80 billion, and Discover Card with 7 percent and $93.67 billion.
Meanwhile, although credit cards bear the logo of Visa, MasterCard, or one of the other networks, they are actually issued by banks. The leading U.S. bank credit card issuers are Bank of America, J.P. Morgan Chase, Citigroup, Capital One, and HSBC Bank.