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Card Issuers Maximize Customer Lifetime Value by Expanding Product Mix
- Card issuers focus on maximizing customer lifetime value by offering the right mix of credit and debit cards, tailored to how customers use them.
- Customer lifetime value (CLTV) is crucial for card issuers, representing the total potential revenue a cardholder generates over their cardholding period.
- Interchange fees, paid by merchants to issuers for each transaction, contribute to issuer revenue along with interest and fees from cardholders.
- A study by PYMNTS Intelligence and Visa DPS reveals that offering a wider variety of cards is linked to financial success for issuers.
- Issuers providing all three main card types – debit, credit, and prepaid – are 3.5 times more likely to achieve high CLTV compared to those offering only one type.
- Having a diverse card lineup not only boosts CLTV but also increases financial performance, with 78% of issuers offering all three card types reporting a good or great year financially.
- Optimizing customer data usage is key, with top issuers prioritizing fast transaction processing, consumer analytics access, reliability, security, and advanced reporting.
- While many issuers play it safe by offering just two card types, the study suggests that diversifying card offerings and leveraging data analytics can lead to greater long-term success.
- Digital banks and FinTechs should consider expanding their card mix to remain competitive as consumer preferences evolve.
- Best-in-class issuers focus on personalization, anticipating consumer needs, and leveraging technology to enhance the customer experience and drive CLTV.
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