Bank of America credit card market share has declined significantly from the position the company once held in the U.S. payments industry. The shift is particularly notable given Bank of America’s history in the credit card business. Its launch of BankAmericard in 1958 helped establish the foundation for what would eventually become the Visa international payment network.
Decades later, Bank of America has slipped to fifth place among leading U.S. credit card issuers, while competitors including JPMorgan Chase and Citi have gained ground. Although Bank of America’s credit and charge volume has returned to roughly its pre-financial-crisis level, its overall share of the market has fallen substantially. The challenge now is finding a strategy capable of rebuilding its card portfolio and restoring the competitive position it once enjoyed.
The irony. Bank of America (BoA), the company behind the 1958’s hit consumer product, BankAmericard, which later evolved to the Visa International payment brand, slipped to 5th place among top tier US credit card issuers.
In dollar terms, Bank of America’s U.S. credit and charge volume is basically exactly where it was pre-crisis.
While that’s better than AmEx, it subsantially trails JPMorgan and Citi.
And, trails it does. Chase’s charge volume in comparison, is just shy of $160 billion versus Bank of America’s $60 billion, services nearly 1 out of every 3 US credit card holders, versus Bank of America who’s metric is 1 out of every 10.
As a percentage of volume, Bank of America’s card arm has met the same fate as American Express Inc., allowing its market share to slip by almost 50 percent, which sits in stark contrast to JPMorgan.
The Jamie Dimon-led bank, with $141 billion in balances, is now in an enviable position, especially if you believe that any broader uptick in loan losses is manageable.
Bank of America’s share of U.S. credit and charge volume has almost halved over the past decade.
There’s a long way to go for BoA to replace their position in the US market. Their Fresno experiment, where they mail dropped 60,000 pre-approved credit cards to residents, spawned the account acquistion strategy. Hopefully, their new strategy will be just as inspiring.
Bank of America faces a significant challenge in regaining the ground it has lost in the U.S. credit card industry. Maintaining roughly the same credit and charge volume as before the financial crisis has not been enough in a market where competitors have expanded their portfolios and captured a larger percentage of consumer spending.
The contrast with JPMorgan Chase is particularly significant. Chase has built substantially greater charge volume and serves a much larger share of U.S. credit cardholders, giving it an increasingly strong competitive position. Bank of America, meanwhile, must determine how to generate meaningful growth rather than simply maintain its existing business.
History demonstrates that Bank of America is capable of reshaping the credit card market. Its famous Fresno experiment, which involved mailing tens of thousands of pre-approved BankAmericards to consumers, helped establish an acquisition model that would influence the industry for years. Reversing the decline in Bank of America credit card market share may require another ambitious approach to customer acquisition, product development, and cardholder engagement. Whether its next strategy proves as influential as its original BankAmericard experiment remains to be seen.
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group
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