Abstract
Report Examines Market Opportunities for Hybrid (Dual Function) Cards
Boston, MA -- In new research, Hybrid Cards: I'll Have Two of
Everything, Mercator examines the characteristics that comprise a
dual-function card in order to create a definition and framework for
considering hybrid card opportunities in the market.
Before electronic wallets and virtual accounts become ubiquitous, the payments
industry will continue to rely on plastic cards as the primary form factor.
Thus, issuers around the world are putting hybrid cards in their consumers'
pockets for myriad purposes and new technologies are being developed that
serve to further enhance plastic card functionality. In addition, the practice
of leveraging subaccounts to segregate purchases into distinct repayment
categories to create hybrid accounts has roots in major issuer strategies,
such as American Express' Sign and Travel, as well as new products, like
Chase's Blueprint.
Major U.S. issuers, including Fifth Third and CitiBank, are offering
cardholders hybrid card products as a means of expanding their brand value and
offering consumers convenient access to broader categories of spend.
This report reviews this dynamic market, offers examples of hybrid card
executions, and examines critical aspects within the development environment.
Major Highlights of This Report Include:
An examination of the business drivers, market dynamics, and technical
advancements that have resulted in the creation of a wide variety of hybrid
cards and accounts.
An analysis of the major characteristics that make up a hybrid card and a
resulting definition.
A review of the seven different types of hybrid cards including examples.
A case study of the Fifth Third DUO card based including product strategy,
best practice guidelines, and near term results of the product operating
in-market.
"The challenge of expanding issuer brand equity in a market that has become
highly fractionalized is a primary problem financial institutions are trying
to solve in the United States. Issuing a hybrid card can be a solution that
bridges the gap between legacy and emerging payment forms and creates a
product construct that is more valuable...," Patricia Hewitt, director of
Mercator Advisory Group's Debit Advisory Service comments.
This report is 28 pages long and has 13 exhibits.
Companies mentioned in this report include: Fifth Third Bancorp, CitiBank,
Wells Fargo, First Data, TSYS, Dynamics, American Express, AAA, Costco,
JPMorgan Chase.
Members of Mercator Advisory Group's Debit Advisory Service have access
to this report as well as the upcoming research for the year ahead,
presentations, analyst access and other membership benefits.
Table of Contents
Executive Summary
Introduction
A Definition of Duality
Business Case Environment
- Consumer Payment Preferences
- Back-End Processing Capabilities
- Shift to Lifestyle Product Strategies
- Hybrid Cards In-Market
In-Market Examples
- Private Label + General Purpose Revolving Credit
- Charge (Pay in Full) + Revolving Credit
- Credit + Stored Value
- Dual Currency
- Stored Value + ID
- Credit + Membership
DUO Card
Development Environment
- Product configuration
- Internal and Consumer Education
- Risk Management
Is Two Better than One?
Figures and Tables
- Figure 1: U.S. Household Card Ownership, 2009 - 2011
- Figure 2: Estimated Global Payment Volume Opportunity, Prepaid Cards -
Global
- Figure 3: Consumer Survey Results Indicate Persistent Uncertainty
- Figure 4: Dynamics Card 2.0® MultiAccount Card
- Table 1: Hybrid Card Types in Market
- Figure 5: Private Label + General Purpose Credit
- Figure 6: Charge (Pay in Full) + Revolving Credit
- Figure 7: Credit + Stored Value
- Figure 8: Dual-Currency Credit
- Figure 9: Stored Value + ID
- Figure 10: Credit + Membership
- Figure 11: Debit + Credit Hybrid DUO Card
- Figure 12: Hybrid Card Development Environment
- Figure 13: Hybrid Card Value Relationships
