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"Mastercard could suffer due to reliance on credit cards"

By admin | March 19th, 2009 | Credit Cards

Some industry officials are claiming that one of the world’s leading credit card networks, Mastercard, could be in for a rough time, and this is because of its reliance on credit cards rather than debit cards.

Over the past ten years Mastercard has enjoyed huge success, with the credit boom enabling consumers to get credit cards more easily, and with consumers keen to use credit cards for their spending. However, things have changes in the world of finances, and this could see Mastercard being hit hard in terms of profits.

Officials have said that Mastercard has become increasingly reliant on earning its profits from credit cards rather than debit cards, and with the current financial crisis and recession this could hit the company’s profits hard. Many people are now unable to get a credit card because credit conditions have become far tougher since the onset of the global credit crunch.

In addition to this many people may be looking to cut back on their credit card spending, for one of a range of reasons. Some may be worried about getting into debt at such a financially turbulent time, others may simply be unable to afford to spend on their cards, and some may find that they cannot afford their credit cards any longer due to job losses in the current recession.

Unlike Mastercard, the leading credit card network in the world, which is the rival firm Visa, has focussed equally both on credit cards and debit cards, so whilst the credit card arm of the firm may suffer people will still use their debit cards for convenience and ease.

One industry official said: “With consumers under considerable pressure from the contraction of credit, net worth and jobs, we suspect sentiment around MasterCard will remain very weak until consumer spending stabilizes.”

Tags: Credit Cards, MasterCard, debit cards

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