What comes next after the Apple credit card?

The next generation of credit cards is being issued today.

It’s no surprise that payment cards continue to rapidly replace the use of cash. Payment cards, including credit and debit cards, account for 77% of all online purchases and 70% of in-person payments, with that number only expected to grow. New and disruptive credit cards like Apple Card are showing traditional and non-traditional banks what’s possible. With the introduction of more flexible payment cards, we’re seeing how consumer attitudes toward their own credit cards are shifting and expectations are rising.

In October 2020, we conducted a survey with Propeller Insights of 2,400 consumers to help give us insights into how consumers feel about their current credit cards and what they’re looking for next. As credit continues to be the preferred method of payment in the U.S., we’re finding that traditional banks’ offerings are getting a run for their money from non-traditional players. Our survey results highlighted who is currently dominating the space and where the biggest opportunities lie for the next generation of innovation in the credit card market.

Traditional banks are current dominators of the credit card space

The credit card market is already saturated. However, even with the growing number of competitors, traditional banks and credit unions still dominate the space. According to our survey, over 56% of consumers say their primary credit card was issued by a traditional bank or credit union. When looking at actual credit card purchase volume, 77% of credit card purchases come from the top 10 credit card issuers in the U.S., according to the Nilson Report’s June 2020 issue. This shows how concentrated the industry is at the moment. Additional facts collected in our survey that support this include:

• 58% of consumers said they only use one card on a regular basis.

• 88% of consumers said they have owned their primary credit card for at least one year. This lines up with other industry research: according to USA Today, 40% have had the same primary card for a decade or more.

Next generation credit cards are gaining attention from consumers

In only one year, we’ve seen consumer preferences shift dramatically when it comes to convenient and flexible payment options. The digital transformation of the payments industry during this last year has also impacted the credit space, and consumers are taking notice of alternative options that may be better equipped to meet their changing needs. When we asked consumers if they were open to adopting credit cards from non-traditional players in 2020, 64% said yes. Compare this to the 55% that said they would in 2019, and we’re seeing an increase of 16% only one year. This signals a growing interest in non-traditional credit card options. Additionally:

• 26% of consumers said their primary credit card was provided by a major tech company like Uber or an alternative finance company like Chime, Venmo, or Revolut.

• While it may not be their primary credit card, 35% said they have owned a card from a non-traditional finance company.

Consumer expectations of non-traditional banks take center stage

According to our survey, consumers are more open now than ever before to credit card offerings issued by non-traditional banks. Consumers are not always satisfied with their current credit cards, with half of them saying they own at least one card that they never even use. When considering a non-traditional bank, card rewards were top of mind for consumers.

• 60% of consumers said they want more flexibility in how they can earn and redeem awards.

• 68% of consumers said they would adopt a card from a brand if it offered better rewards or offers on purchases with that brand.

With consumer expectations of their credit cards shifting, there are abundant opportunities for non-traditional issuers. Many consumers are looking for the flexible, unique rewards and options that alternative financial companies can offer. The real question will be, who will shine and capture the market share?

Keep a lookout for two additional research blogs on consumer credit card preferences in the coming weeks including deep dives into credit card rewards and financial tools for building credit scores for the underbanked. Learn more about Marqeta’s credit offering at marqeta.com/platform/credit.