Premium Cards: Targeting Affluent Consumers

Published by: Datamonitor

Published: Dec. 16, 2011

Table of Contents

OVERVIEW

Catalyst

Summary

EXECUTIVE SUMMARY

Assessing the attractiveness of the affluent customer segment

Defining different credit card customers and credit card products

Affluent consumers are a sizable group, and are currently well-served by card issuers

Affluent credit card customers are crucial to issuers

Fee and transaction fee income dominate affluent credit card customer revenue

Emerging countries represent the future high growth affluent markets

Profiling the affluent credit card customer

Affluent customers hold more credit cards per person than the average credit card customer

The minority of affluent customers makes up the majority of the revenue

Affluent customers are more likely to look for a new credit card than mass market consumers

Affluent cardholders behave differently from the mass market in two key ways

Sizing global premium card opportunities

Datamonitor's Premium Cards Opportunity Model sizes the target market for premium cards

Overall, 11 million affluent customers are expected to become premium card customers in the next 12 months

Emerging countries represent a high growth opportunity for premium cards

The US remains the largest addressable market for premium cards

The future of premium credit cards

The high levels of credit card penetration have caused traditional premium brands to lose their exclusivity

Card issuers and schemes continue to target affluent consumers with post-platinum brands

Unique services will provide a point of differentiation for the affluent segment

ASSESSING THE ATTRACTIVENESS OF THE AFFLUENT CUSTOMER SEGMENT

Defining different credit card customers and credit card products

This report examines both the affluent customer group and the products designed to serve it

Affluent consumers are a sizable group, and are currently well-served by card issuers

The US represents the largest market of affluent customers

Demand for credit cards is high among affluent customers

However, premium card penetration is low among affluent credit card customers in some countries

Affluent credit card customers are crucial to issuers

The average affluent credit card customer generates 35% more revenue than the average mass market customer

Fee and transaction fee income dominate affluent credit card customer revenue

Affluent customers will drive the future growth of credit cards

PROFILING THE AFFLUENT CREDIT CARD CUSTOMER

Affluent customers have access to a wide range of card products

Affluent customers hold more credit cards per person than the average credit card customer

The majority of affluent customers are active credit card users, but attachment levels vary globally

Affluent customers show strong demand for credit cards

Affluent customers are more likely to look for a new credit card than mass market consumers

Affluent customers are better informed about credit card products than the mass market

Affluent cardholders behave differently from the mass market in two key ways

Affluent customers spend 3.2 times more on their credit cards than mass market customers

Affluent customers are more open to new payment innovations than the mass market

SIZING GLOBAL PREMIUM CARD OPPORTUNITIES

Datamonitor's Premium Cards Opportunity Model sizes the target market for premium cards

The Premium Cards Opportunity Model identifies two key consumer groupings for premium cards

Emerging countries will become high growth markets for premium card issuers

Overall, 11 million affluent customers are expected to become premium card customers in the next 12 months

Emerging countries represent a high growth opportunity for premium cards

Not all card issuers benefit from upgraders

The US remains the largest addressable market for premium cards

High growth in the number of affluent customers in emerging countries will provide strong future growth

THE FUTURE OF PREMIUM CREDIT CARDS

The erosion of premium branding has not affected the targeting of affluent consumers

The high levels of credit card penetration have caused traditional premium brands to lose their exclusivity

Card issuers and schemes continue to target affluent consumers with post-platinum brands

Cards branded above platinum offer differentiation, but some are at risk of losing their exclusive status

Visa Signature and MasterCard World are aimed at offering extra services

However, the pressure to use this branding to attract customers is devaluing such offerings

Individuality is the key to targeting niche affluent segments

Card issuers with leadership in a particular area are valued highly by affluent customers

Invitation only cards provide additional exclusivity for high net worth customers

Unique services will provide a point of differentiation for the affluent segment

APPENDIX

Supplementary data

Methodology

Datamonitor's Global Credit Card Revenue Model analyzes card issuer revenue from three different sources

Primary and secondary research

Further reading

Ask the analyst

Disclaimer

TABLES

Table: Premium brands used by the main international card schemes

Table: A comparison of the minimum requirement guideline for Visa Signature in different countries

Table: Affluent customers across different countries, 2011

Table: Credit card penetration across different countries, by segment, 2011

Table: Penetration of premium cards among affluent credit card customers, 2011

Table: Annual revenue per credit card customers across different countries ($), 2011

Table: Annual revenue per affluent credit card customers, by source of income ($), 2011

Table: Affluent credit card customers and their primacy, 2011

Table: Monthly credit card spend, by segment ($), 2011

Table: Potential upgraders and new entrants to the premium card market, by country (percentage of consumers), 2011

Table: Level of opportunity and addressable market size for new premium card customers, by country, 2011

FIGURES

Figure: Datamonitor's definition of premium products and affluent customers

Figure: Emerging countries represent high growth for the premium card market

Figure: Datamonitor's definition of premium products and affluent customers

Figure: The US is the largest market for affluent customers

Figure: Credit card penetration is higher among affluent customers than mass market customers

Figure: 60% of global affluent credit card customers have a premium credit card

Figure: High inequality of wealth distribution creates demand for exclusivity

Figure: Affluent credit card customers generate more revenue per head than the mass market

Figure: Fee-derived income accounts for the majority of revenue from affluent credit card customers

Figure: Source of income differs substantially between countries

Figure: Emerging countries are the future high growth affluent markets

Figure: Affluent customers hold more credit cards than the average customer

Figure: Affluent customers in France have the greatest attachment to a single credit card, while those in Singapore are most likely to use multiple cards

Figure: The high proportion of customers who look for new credit cards represents both an opportunity and a threat

Figure: Affluent customers are better informed about credit card products than mass market customers

Figure: Affluent customers spend 3.2 times more on their credit cards than mass market customers

Figure: Travel, food and drink, and fuel expenses are the three leading categories of credit card usage among affluent customers

Figure: One in four affluent customers have used contactless payments

Figure: Affluent customers are more open to using mobile phones for banking-related services

Figure: Affluent customers have higher levels of trust in their card issuers than the average consumer

Figure: There are two target growth areas for premium cards: affluent consumers without a premium card and those with no credit card at all

Figure: Upgraders represent the main source of growth for premium cards

Figure: Emerging countries represent high growth for the premium card market

Figure: The US has the largest addressable market for premium cards

Figure: There is a high penetration of premium-branded cards among mass market customers in many countries

Figure: Lloyd TSB and Standard Chartered in Singapore are two issuers that no longer offer gold credit cards

Figure: Examples of the extra levels of services offered to attract mass affluent customers

Figure: Metal cards help convey a special status

Figure: Datamonitor's Global Credit Card Revenue Model

Abstract

• Use these insights into the behaviour of affluent credit card customers across 20 countries to shape your acquisition strategy.
• Successfully target affluent credit card customers by understanding what they want and how they use payment cards
• Better target the niche affluent consumer segment by understanding successful strategies to approach new premium card customers
• See the size of the prize from winning new affluent customers, in 20 countries

• How big is the premium card market, and how much revenue do these cards generate compared to the mass market?
• What are the key differences and why the affluent credit card customers behave differently to the mass market?
• What is the expected growth for the premium card market and where will the growth come from?
• What is the future of premium cards?

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