It is not a surprise the consumers and lenders are equally taken aback by the Credit Card Accountability, Responsibility and Disclosure Act of 2009. Not many retailers took into consideration the impact of this Act until it hit them on their face. In an effort to curtail credit card abuse, the companies that issue credit cards implemented new fees and increase their interest rates. In retaliation to this move, many American consumers starting curtailing the purchases made using their cards. It is a known fact that a lot of customers do use their credit card to pay for medical expenses and food; however, it is the retail purchases that top their list of spending using these cards.
The impact of these new changes in the credit card industry has still not been completely felt. It impact is now beginning to show up since the consumer's spending habits are showing a considerable change. Another reason for the retailers not to have felt the impact till date is that fact that they have been busy trying to fight out the increase in the interchangeable fees. In the process, the retailers have lost a considerable amount of their profits.
To add to their woes, there are a few retailers who suffered a double blow. The ones who suffered a double impact were the ones that offer credit cards of their own in addition to branded credit cards. Signet Jewelers and Nordstorm are two in the list of innumerable companies that experienced a double set back. In addition to getting a percentage from the brand that issues credit cards used for purchasing retailer goods, these companies also made money from the fees and interest collected on the cards that they issued. For a large number of retailers who fall under this category, over 50% of the total sales is through the credit cards segment. Their overall loss was compounded by many factors including reduced sales, reduced spending, income from fee and fall of interest.
The retailers also benefited from the data of the spending habits of consumers that they were able to figure out based on the credit card transactions. The new act has not only led to the loss of sales, but also loss of data which is very crucial for the retailers to develop their marketing strategies. A large number of retailers have expressed grave concerns about the introduction of the new laws. Many retailers are now considering re-negotiating the terms of the contract with credit card companies before renewing their contracts.