In the world of plastic, master card and visa have for long been the sole leaders of an otherwise barren industry. But in business, well entrenched players will seldom go on a full out war against each other. More often, it so happens that a successful take over will happen from unexpected quarters.
MasterCard and visa have forever been the only plastic cards which have a well entrenched presence across the globe. In a very few closed countries with strong domestic industry, there are other players who dominate the local markets. China is a classic example of such a country with other players who have managed to take over the local markets, like union pay. But still, the major players are accepted in most large banks and stores.
Other players in the international scene include American express which has made a small dent in the top end after decades of investment and marketing. but on the other hand, discover financial group has barely made any inroads into the global plastic card business. And this is even after it provides a better deal than any of the major players.
On the other hand AT&T and even Verizon are now of a great assistance to discover and may help it break the monopoly that MasterCard and visa have managed to establish. These wireless companies have set up a plan that will allow U.S customers to pay through their cell phones. T-Mobile has recently announced that it will also enter the wireless payment niche by collaborating with Barclays PLC and discover.
Mobile payments are now the new buzz word in the global payment industry. A lot of businesses in the developing world are being attracted to this concept given the lack of bank branches or ATM’s. And the number of people who own a cell phone in these countries is startling. China has the largest number of mobile phone customers with an estimated six hundred million subscriptions and India has also overtaken the United States with more than three hundred million active cell phones. This provides for a large untapped market resource for the mobile payment business.
Almost all the profits for the card companies come from merchants who pay handsomely in order to utilize the services of the companies that allow plastic payments. Normally a fee of around two and a half percent is paid to the credit card company by the merchant whenever a transaction is made.
Plastic has become so popular these days that people only use cash for small sundry transactions. Any large purchase is better handled by cards since the hassle of counting and carrying a large amount of cash is avoided. It was estimated that 36 percent of all purchases made in the year 2003 were made through plastic cards. After all this swiping, visa’s annual income rose to three and a half billion in 2005 and master card follows closely with slightly more than two billion dollars. But in the future, these dividends are definitely going to go down.