From the financial results that credit card companies have turned in recently, it appears that despite their assertions to the contrary, reform measures passed over the past couple of years haven't hurt the industry's bottom line.
Credit card companies lobbied hard against the Credit Card Accountability, Responsibility, and Disclosure Act of 2009, which barred issuers from raising interest rates without notice, and the Durbin Amendment to the Dodd-Frank reform legislation, which capped processing fees that card companies could charge merchants. The claim was that these regulations would hurt their profit margins, but, as it turns out, they needn't have worried.
Visa did all right as well, reporting a 15% rise in revenue year over year with an 11% increase in cardholder transactions. The company teamed up with Vodafone
Let's not forget American Express
American Express' card, code-named"Bluebird," is targeting the less affluent set that normally wouldn't apply for a standard AmEx card. The company has partnered with Twitter to bring users special offers from retailers, as long as they sync their card with an active Twitter account.
Credit card issuers are on a roll, and things can only get better as the economy continues to improve. Although both Visa and MasterCard have been named in lawsuits with retailers regarding swipe fees, analysts are sanguine since the percentage of revenue being targeted is small -- only 2%. The forays into new territory that these vendors are executing should continue to increase profits for some time, and, as these companies are flexible and always right on top of new trends to exploit, they will continue to find new opportunities. What else could a financial investor ask for?
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