JPMorgan Chase is upping the ante in the struggle for dominance in the lucrative North American credit card market. The US credit card lender is aiming to get a major share in the market for wealthy cardholders with incomes exceeding $120,000 dominated by AmEx, by launching Saphire card – reported Bloomberg.
In an interview to the newspaper, Gordon Smith, chief executive officer of the card division, said: The card business is a mirror image of the economy and it’s been an extremely difficult time. Cards are an important part of how we live our lives and I think we’ll see a strong future once we’re out of the difficult economy.
The bank had lost $1.59 billion in the past three quarters due to a 2% drop in consumer spending and is not expecting a profit this year and in 2010. Our desire is to make sure we have exactly the right product in the hands of our customers. If we cannibalize ourselves and move customers from one product to another, but we capture more of their business, then we’re absolutely fine with that, he added.
According to a report by Nilson, Visa and MasterCards are accepted in close to 15.9 million locations compared to a meagre 4.6 million of AmEx. Mr. Smith has added that Saphire card is available as a Visa or MasterCard and it would be advantageous to the bank as both the cards are accepted in more places across the US than AmEx.
However, Kenneth Chenault, CEO of AmEx, said: American Express cardholders on average spend 3.5 times more than Visa cardholders and 4.5 times more than MasterCard users. Merchants are looking for customer spending and our cardmembers provide it. Despite all the claims by Visa and MasterCard about success in the affluent segment, where it really counts — in the results — they haven’t moved the dial at all.
