| By Jim Bruene on May 13, 2000 9:31 PM | Comments (0) |
We’ve chronicled the growth of credit card sales over the Web during the past several years. The market didn’t take off until 1998 when NextCard and First USA launched high-profile online applications and marketing programs . Now, researchers estimate that 500,000 or more card accounts are generated online each quarter (Table 2 & 4). NextCard, consistently one of the Web’s largest online advertisers, draws more than 4 million unique visitors to its Web site each month, the highest total for any financial services provider, and more than the next two issuers, Discover Card and First USA combined (Table 1). Although NextCard has only been converting 4 out of every 1,000 visitors into new accounts, its upcoming secured card program will allow far more consumers to be eligible for a NextCard. As for the industry as a whole, Forrester estimates that the online channel will account for 6% of card loans originated in 2000, rising to 16% in 2003 (Table 2).
Table 1
Web Traffic at Top 12 Credit Card Issuers
unique monthly visitors (thousands)
Source: PC Data Online www.pcdataonline.com ; Gomez Advisors Spring 2000 Credit Card Scorecard, rank among 17 card issuers www.gomez.com , 5/00; n.r.=not rated
1accountonline.com is Citibank’s consumer statement access site, these figures do not include traffic at www.Citibank.com or its business card statement access site
Table 2
Online Originations (U.S.)number of accounts in millions, dollars in billions
| Year |
Number |
Online $ |
Total $ |
Online % of $ |
| 1999 |
1.0 mil |
$5.2 |
$121 |
4.3% |
| 2000 |
1.4 mil |
$7.7 |
$120 |
6.4% |
| 2001 |
2.0 mil |
$11.3 |
$123 |
9.2% |
| 2002 |
2.8 mil |
$15.9 |
$127 |
12.5% |
| 2003 |
3.7 mil |
$21.5 |
$132 |
16.3% |
| Growth |
2.7 mil |
$16.3 |
$11 |
12% |
| CAGR |
39% |
43% |
2.2% |
40% |
Source: Forrester Research, 1999
Table 3
Market Share of Online Issuers (U.S.)share of cards issued through online marketing, first half 1999
| Issuer |
By Cards Issued Online |
By Online Charge Volume |
| Citibank |
24% |
13% |
| First USA | 24% | 25% |
| Capital One |
6% |
2% |
| MBNA |
6% |
7% |
| American Express |
5% |
16% |
| Discover |
5% |
9% |
| NextCard |
5% |
ina |
| First Premier |
3% |
ina |
| Providian |
3% |
3% |
| Chase |
ina |
5% |
| Bank of America |
ina |
4% |
| Others |
22% |
16% |
Source: Brittain Associates, 1999
Table 4
Number of Cards Issued Online (U.S.)Q3 1999
| Issuer |
Number |
Share |
| First USA* |
188,000 |
38% |
| Aria |
60,000 |
12% |
| MBNA* |
50,000 |
10% |
| NextCard |
46,000 |
9% |
| Capital One* |
19,000 |
4% |
| Multi-Lender Sites* |
22,000 |
4% |
| Other* |
116,000 |
23% |
| Total |
501,000 |
100% |
Source: Piper Jaffray, 1/00; company reports
*Piper Jaffray estimates
Table 5
Credit Card Acquisition Costs
| Method of acquisition |
Cost per acquired account |
|
|
Range |
Average |
|
|
Portfolio acquisition |
$80 to $180 |
$116 |
| Agent bank programs |
$75 to $90 |
$82 |
| Solicitation |
$60 to $110 |
$69 |
| Internet driven |
$38 to $55 |
$43 |
Source: R. K. Hammer, Thousand Oaks, CA
Table 6
Online Credit Card Usage (U.S.)unique monthly visitors
| Metric |
1999 |
1998 |
1997 |
| Adults using credit cards online | |||
| Total |
19.2 mil |
9.3 mil |
4.9 mil |
- Visa |
70% |
|
|
| - MasterCard |
33% |
|
|
| - American Express |
12% |
|
|
| - Discover |
6% |
|
|
| Total credit card applications | |||
| 1999 4.1
million 2000 5.5 million 2001 7.2 million 2002 9.3 million 2003 12.1 million 2004 15.7 million CAGR = 30% |
|||
Source: Cyber Dialogue 12/99, American Internet User Survey of 1,000 Internet users and 1,000 nonusers; part of the Cybercitizen Continuous Advisory Service
Far more users are shopping for financial services online than are actually purchasing online. The simplest, and least risky product from the buyer’s perspective, credit cards, has the highest percentage of online lookers who follow through with an application, 44%. Not surprising, mortgages have the lowest follow-through percentage, 5%.Table 7
Researchers vs. Buyers, 1999millions of users
|
Product |
Online Info. Search |
Online Application |
% Applying |
| Credit cards |
9.4 |
4.1 |
44% |
| Loans |
2.7 |
1.0 |
37% |
| Insurance |
12.9 |
0.9 |
7% |
| Mortgages |
8.1 |
0.4 |
5% |
| Total |
33.1 |
6.4 |
19% |
Source: Cyber Dialogue 12/99, American Internet User Survey of 1,000 Internet users and 1,000 nonusers; part of the Cybercitizen Continuous Advisory Service
Most Recent Posts:
- Mobile Remote Deposit Capture by the Numbers (thanks USAA) - Jul 20, 2010
- Can Banking Income Woes Be Fixed with a $5.95 Fee? - Jul 17, 2010
- Only 2 Days Left to Save $300 on Your FinovateFall Ticket - Jul 14, 2010
Leave a comment