Visa Retains Top Credit Card Spot

Visa seems in no danger of losing its status as the leading American credit card brand, according to the American Banker's 1991 consumer survey.

Despite aggressive competition from American Express and the Discover card, Visa this year strengthened its claim to being the most frequently used card.

MasterCard remains second in market share but is not growing nearly as fast as Visa.

The findings are based on the American Banker's eighth annual consumer poll, administered this year by the Gallup Organization Inc., Princeton, N.J. Gallup conducted 1,007 interviews with heads of households that have one or more accounts with a financial institution.

Seven of eight respondents had a credit card of some kind, and three out of four had at least one bank-issued MasterCard or Visa.

The survey also showed that the number of cardholders is continuing to grow even as many industry analysts deem the credit card business saturated - a sign that there are still opportunities for aggressive marketers.

One of every five households that already owned at least one credit card acquired at least one more over the past year, the survey said. And one of every five newly acquired cards was an AT&T Universal card - the most successful new credit card product of recent years.

Visa is clearly the most popular brand. While 61% of the respondents hold Visa cards, 37% of all cardholders said they use Visa most frequently.

The figures for MasterCard are 50% and 23%, for American Express 24% and 8%, and for Sears, Roebuck and Co.'s Discover card 23% and 5%.

Over Half Use Visa Most

Looked at another way, 53% of Visa holders use Visa the most, compared with 40% of MasterCard holders, 31% of American Express charge-card holders, and 18% of Discover holders.

In another sign of Visa's popularity, new Visa accounts were opened by 12% of households over the past year, compared with 8% opening MasterCard accounts and 2% Discover accounts.

Retail store cards, considered a single product, are actually the most popular, held by 70% of consumers. But only 16% said a retail card is the one they use the most frequently.

Visa's penetration of total households, up to 61% this year, maintained the 11-percentage-point lead over MasterCard that showed up in the 1988 and 1990 American Banker surveys. But Visa's lead as most frequently used widened to 14 points this year from 11 in 1988 and 1990.

Observers attribute Visa's dominance to its advertising and marketing campaigns.

"It speaks directly to the power of Visa ads over the past few year" said Donald Auriemma, a card industry consultant based in Garden City, N.Y. "Today both MasterCard and Visa are strong in advertising, but for a few years Visa had a distinct advantage."

Ad Budget Doubled

Frequency of use is an important measure of success in today's competitive credit card environment. Gone are the days when getting a card into a consumer's wallet resulted in instant revenue. With more and more banks waiving annual fees to make their cards more attractive, it becomes increasingly critical to generate usage.

Visa shelled out $49.9 million in 1990 to buy advertising time and space for its card products, according to Leading National Advertisers Inc. Those dollars represent 14% of the $347 million spent by the card industry as a whole and more than twice as much as the $26.8 million Visa spent in 1989.

Visa also considerably exceeded the $40.5 million in media buys made in 1990 by MasterCard International.

Visa's umbrella marketing campaigns were believed to be stronger than MasteCard's in much of the 1980s, leading many issuers to promote Visa more heavily, industry observers said. It was an aftereffect of the huge promotional campaigns in the 1970s surrounding Visa's name change from BankAmericard.

"The MasterCard/Visa split is more a function of the provider - the banks - than it is of the consumer," said Anne Moore, president of Synergistics Research Corp., Atlanta. "MasterCard will now begin to narrow that gap."

MasterCard's expected gains are due in part to a 1990 advertising campaign that positions MasterCard as the card for Middle America. MasterCard is also expected to pick up more cardholders because of its membership policies. MasterCard is perceived as more receptive to nonbank members than Visa. Recently, Visa extended until October a moratorium that prohibits nonbanks from joining.

Also competing for a share of the consumer's wallet are American Express' platinum, gold, and green cards and its Optima revolving credit card; Sears' Discover card, and the many brands of retailer and oil-company cards.

According to the 1991 American Banker survey, charge cards issued by American Express Travel Related Services Co. are carried by 20% of the public, while Optima is in the hands of another 4%. The company's 24% total market penetration is comparable to Discover's 23%.

Although American Express' market share isn't the largest, its ad budget certainly is. The New York-based company spent $106.7 million on card advertising last year. Although that was down from the $123.8 million it spent the preceding year, it accounted for almost one-third of the industry's media purchases.

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