April 22, 2010
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Canadians Benefit From CC Rules, Pt.2
Relationship changes.The relationship between cardholder, merchant and credit card company will change as well as card issuers take a greater interest in meeting the needs of the retailer. This increased merchant focus will include:
Increased loyalty programs will be developed for the retailer: Credit card companies will begin to partner with retailers to make relevant offers that are more attractive to the consumer. These offers might include electronic rewards and automatic redemptions.
More opportunities developed for recurring payment: Credit card companies will offer the prepaid option for added rewards or benefits particularly in payment delivery to the consumer.
Increased security protections during credit card payment processing: New security features will be developed to fight fraud such as the chip based card, tokenization, and tougher payment processing standards. The need for growing credit card fraud which has cost the financial industry billions of dollars a year has lead to higher interchange fees. Reducing card fraud will help to reduce merchant costs in processing payments.
Credit card companies will provide enhanced financial education to consumers: As consumers learn greater financial responsibility in reducing debt, less money will be spent on interest, penalties, and fees which will increase consumer spending. Consumers will develop greater confidence, trust, and loyalty to retailers.
New choices and new faces: Credit card companies will struggle meeting the expectations of new standards forcing them to exit the industry. As some cards are cancelled as a result, Canadians will see less width and greater depth in credit card options. The process may provide merchants with a new opportunity of providing their own credit product.
No doubt with the continuous development of new technologies, increased emphasis on rewards, enhanced security products, and a redirection on offering benefits to select groups of Canadians based on their reliability and spending habits the Canadian credit card industry is about to become a new animal; one that may not bite as sharply.