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Canadian Credit Cards - US - September 2009

This report examines the trends and opportunities in the Canadian credit card industry. It estimates the size of the market and analyzes the top players and their strategies. It also presents an overview of the Canadian banking and payments systems. This report also examines:

  • The major issues affecting the industry and analyzes their possible impact, including the state of the economy, credit quality trends, and proposed legislative and regulatory changes
  • Canadian views on credit, from both lender and consumer perspectives, and how those attitudes affect product performance and new product potential
  • Population trends in Canada and how those might offer opportunities to lenders
  • An in-depth look at Canadian consumer attitudes towards credit and debit cards, including advertising and direct mail and rewards programs

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Table of contents

  1. Scope and Themes

    • Scope of this report
      • What you need to know
        • Data sources
          • Consumer survey data
            • Advertising Creative
              • Abbreviations and terms
                • Abbreviations
                  • Terms
                    • Companies mentioned in this report
                    • Executive Summary

                      • Industry highlights
                        • Changing landscape
                          • Consumer attitudes towards credit cards
                          • Insights and Opportunities

                            • Breaking Canadians’ bias against credit cards
                              • Asians represent a compelling demographic niche
                                • Duality creates new opportunities for issuers and brands
                                • Inspire Insights

                                  • My Financial Service
                                    • What’s it about?
                                      • What we’ve seen
                                        • Specifics
                                        • Market Size and Characteristics

                                          • Key points
                                            • Total market size and top players
                                              • Figure 1: Top Canadian credit card issuers ranked by receivables, year ending April 2008 and April 2009
                                              • Figure 2: Canadian credit card banks, card service revenue, three months and six months ending April 2008 and April 2009
                                          • Competitive Context – Banking Overview

                                            • Key points
                                              • Bank regulation in Canada
                                                  • Figure 3: Big five Canadian banks, April 2009
                                              • Leading Issuers

                                                • Key points
                                                  • CIBC (Canadian Imperial Bank)
                                                    • Royal Bank of Canada (RBC)
                                                      • Scotiabank
                                                        • TD Bank (Toronto-Dominion)
                                                          • MBNA Canada Bank
                                                            • BMO (Bank of Montreal)
                                                              • Desjardins Group (Fédération des Caisses Desjardins du Québec)
                                                                • Canadian Tire
                                                                  • Capital One Bank Canada
                                                                    • J.P. Morgan Chase Canada
                                                                      • Citigroup
                                                                        • American Express
                                                                        • Canadian Payments Landscape

                                                                          • Key points
                                                                              • Figure 4: Credit Card payment rate (percentage of outstanding balance paid), March 2000 through March 2009
                                                                            • Interac Association
                                                                                • Figure 5: Top five countries in debit use, 2007
                                                                                • Figure 6: Interac Direct Payment transactions, merchants, terminals, C$ value, and users per year, 1997-2008
                                                                                • Figure 7: Payment method used most among ABM cardholders, 1997-2008
                                                                              • Credit card share is growing
                                                                                • Visa vs. MasterCard share
                                                                                  • MasterCard is growing faster but is still well behind
                                                                                    • MasterCard leads in cards and accounts
                                                                                        • Figure 8: Visa vs. Mastercard in Canada, 2008-07
                                                                                        • Figure 9: Credit card statistics, VISA and MasterCard, 1990-2008
                                                                                    • Market Drivers

                                                                                      • Key points
                                                                                          • Figure 10: Credit card delinquency and loss statistics, VISA and MasterCard, 2004-09
                                                                                        • Economic forecast: Stronger growth expected in Canada
                                                                                          • Strong growth in disposable incomes
                                                                                            • Significant differences between Canada and U.S. housing markets
                                                                                              • Figure 11: Subprime mortgage default rates, U.S. and Canada, 2001-08
                                                                                              • Figure 12: Prime mortgage default rates, U.S. and Canada,1998-2008
                                                                                          • Canadian Population and Immigration Trends

                                                                                            • Key points
                                                                                                • Figure 13: Canadian population, by province, 2004-08
                                                                                            • The Regulatory Environment and Duality

                                                                                              • Key points
                                                                                                • Duality and debit cards
                                                                                                  • What’s likely to happen next
                                                                                                    • Consumer awareness of credit card duality
                                                                                                      • Figure 14: Awareness of ending of duality ban, by gender, June 2009
                                                                                                      • Figure 15: Awareness of ending of duality ban, by province, June 2009
                                                                                                      • Figure 16: Has recently been offered another card brand, by gender, June 2009
                                                                                                      • Figure 17: Has recently been offered another card brand, by income, June 2009
                                                                                                      • Figure 18: Has recently been offered another card brand, by race, June 2009
                                                                                                  • Credit Card Regulation and Legislation – Other Developments

                                                                                                    • Key points
                                                                                                    • Innovations and Innovators

                                                                                                      • Capital One’s guaranteed MasterCard for newcomers
                                                                                                          • Figure 19: Capital One Guaranteed Mastercard for newcomers direct mail advertisement, 2009
                                                                                                      • Advertising and Promotion

                                                                                                        • Key points
                                                                                                          • Direct mail volume plunges in first quarter 2009
                                                                                                            • New and notable credit card direct mail campaigns
                                                                                                                • Figure 20: MBNA direct mail advertisement, 2009
                                                                                                                • Figure 21: Scotiabank direct mail advertisement, 2009
                                                                                                                • Figure 22: Scotiabank direct mail advertisement, 2008
                                                                                                                • Figure 23: Citibank direct mail advertisement, 2009
                                                                                                                • Figure 24: CIBC direct mail advertisement, 2008
                                                                                                                • Figure 25: CIBC direct mail advertisement, 2009
                                                                                                                • Figure 26: American Express direct mail advertisement, 2009
                                                                                                              • Television advertising
                                                                                                                • Figure 27: RBC television advertisement using Andy Kim celebrity endorsement, 2009
                                                                                                                • Figure 28: RBC small business television advertisement, 2009
                                                                                                                • Figure 29: TD Bank television advertisement with Kelly and Regis, 2009
                                                                                                                • Figure 30: TD Banknorth television advertisement with Kelly and Regis, 2009
                                                                                                                • Figure 31: TD Banknorth television advertisement with Kelly and Regis, 2009
                                                                                                                • Figure 32: TD Banknorth television advertisement with Kelly and Regis, 2009
                                                                                                            • The Consumer

                                                                                                              • Key points
                                                                                                                • Miles, points, or cashback?
                                                                                                                  • Figure 33: Credit card types owned, by gender, June 2009
                                                                                                                  • Figure 34: Credit card types owned, by age, June 2009
                                                                                                                  • Figure 35: Credit card types owned, by HH income, June 2009
                                                                                                                  • Figure 36: Reasons for using credit cards, by gender, June 2009
                                                                                                                  • Figure 37: Credit card types used, by HH income, June 2009
                                                                                                                • Credit, debit, or cash?
                                                                                                                    • Figure 38: Payment methods used, by gender, June 2009
                                                                                                                    • Figure 39: Payment methods used, by age, June 2009
                                                                                                                    • Figure 40: Payment methods used, by HH income, June 2009
                                                                                                                  • Credit cards preferred for big-ticket items
                                                                                                                      • Figure 41: Credit card usage preference by category, averages of a 5 point scale where 1=never and 5=always, by gender, June 2009
                                                                                                                      • Figure 42: Credit card usage preference by category, ranked, by age, June 2009
                                                                                                                      • Figure 43: Credit card usage preference by category, by HH income, June 2009
                                                                                                                    • Canadians are aggressive about paying off balances
                                                                                                                        • Figure 44: Card payment activity, by gender, June 2009
                                                                                                                        • Figure 45: Card payment activity, by age, June 2009
                                                                                                                        • Figure 46: Card payment activity, by HH income, June 2009
                                                                                                                        • Figure 47: Credit card balances, by gender, June 2009
                                                                                                                        • Figure 48: Credit card balances, by age, June 2009
                                                                                                                        • Figure 49: Credit card balances, by HH income, June 2009
                                                                                                                      • Canadians stick to one or two cards
                                                                                                                          • Figure 50: Number of cards used each month, by gender, June 2009
                                                                                                                          • Figure 51: Number of cards used each month, by age, June 2009
                                                                                                                          • Figure 52: Number of cards used each month, by HH income, June 2009
                                                                                                                        • Canadians read direct mail, but are leery of e-mail
                                                                                                                            • Figure 53: Attitudes towards credit card advertising, by gender, June 2009
                                                                                                                            • Figure 54: Attitudes towards credit card advertising, by age, June 2009
                                                                                                                            • Figure 55: Credit card mail solicitations received, by gender, June 2009
                                                                                                                            • Figure 56: Credit card mail solicitations received, by age, June 2009
                                                                                                                            • Figure 57: Credit card mail solicitations received, by HH income, June 2009
                                                                                                                          • Building credit is a major influence on choosing a card
                                                                                                                              • Figure 58: Major influences on credit card choice, by gender, June 2009
                                                                                                                              • Figure 59: Major influences on credit card choice, by age, June 2009
                                                                                                                              • Figure 60: Major influences on credit card choice, by HH income, June 2009
                                                                                                                            • Debit is preferred over credit cards; the internet still worries many
                                                                                                                                • Figure 61: Opinions about credit cards, by gender, June 2009
                                                                                                                                • Figure 62: Opinions about credit cards, by age, June 2009
                                                                                                                                • Figure 63: Opinions about credit cards, by HH income, June 2009
                                                                                                                              • Recent penalty actions taken by credit card issuers
                                                                                                                                  • Figure 64: Recent actions by credit card issuer, gender, June 2009
                                                                                                                                  • Figure 65: Recent actions by credit card issuer, by age, June 2009
                                                                                                                                  • Figure 66: Recent actions by credit card issuer, by HH income, June 2009
                                                                                                                                  • Figure 67: Recent actions by credit card issuer, by province, June 2009
                                                                                                                                • Canadians not loyal when it comes to credit cards
                                                                                                                                    • Figure 68: Recent credit card related activities, by gender, June 2009
                                                                                                                                    • Figure 69: Recent credit card related activities, by age, June 2009
                                                                                                                                    • Figure 70: Recent credit card related activities, by HH income, June 2009
                                                                                                                                    • Figure 71: Recent credit card related activities, by province, June 2009
                                                                                                                                  • Recent credit card behavior
                                                                                                                                      • Figure 72: Recent credit card behavior, by gender, June 2009
                                                                                                                                      • Figure 73: Recent credit card behavior, by age, June 2009
                                                                                                                                      • Figure 74: Recent credit card behavior, by HH income, June 2009
                                                                                                                                      • Figure 75: Credit card use compared to one year ago, by gender, June 2009
                                                                                                                                      • Figure 76: Credit card use compared to one year ago, by age, June 2009
                                                                                                                                      • Figure 77: Credit card use compared to one year ago, by province, June 2009
                                                                                                                                  • The Consumer – Focus on Asian Newcomers

                                                                                                                                    • Key points
                                                                                                                                      • Asians are highly desirable credit card customers
                                                                                                                                          • Figure 78: Opinions about credit cards, by race/ethnicity, June 2009
                                                                                                                                          • Figure 79: Recent credit card behavior, by race/ethnicity, June 2009
                                                                                                                                          • Figure 80: Credit card usage preference, by category, ranked, by race/ethnicity, June 2009
                                                                                                                                          • Figure 81: Recent actions by credit card issuer, by race/ethnicity, June 2009
                                                                                                                                          • Figure 82: Credit card types used, by race/ethnicity, June 2009
                                                                                                                                          • Figure 83: Major Influences on credit card choice, by race/ethnicity, June 2009
                                                                                                                                          • Figure 84: Attitudes towards credit card advertising, by race/ethnicity, June 2009
                                                                                                                                      • Cluster Analysis

                                                                                                                                          • Unrewarded, debit-carders
                                                                                                                                            • Informed, offer-readers
                                                                                                                                              • Rewarding, full pay-offers
                                                                                                                                                • Characteristic tables
                                                                                                                                                  • Figure 85: Credit card user clusters, June 2009
                                                                                                                                                  • Figure 86: Type of credit card(s) owned, by credit card user clusters, June 2009
                                                                                                                                                  • Figure 87: Reason(s) for using credit cards, by credit card user clusters, June 2009
                                                                                                                                                  • Figure 88: Type of purchases for which respondent uses credit cards, by credit card user clusters, June 2009
                                                                                                                                                  • Figure 89: Payment behavior, by credit card user clusters, June 2009
                                                                                                                                                  • Figure 90: Attention paid to marketing materials, by credit card user clusters, June 2009
                                                                                                                                                  • Figure 91: Features influential in choice of credit card, by credit card user clusters, June 2009
                                                                                                                                                  • Figure 92: Credit and debit preferences, by credit card user clusters, June 2009
                                                                                                                                                  • Figure 93: Awareness of duality, by credit card user clusters, June 2009
                                                                                                                                                  • Figure 94: Interest in receiving different card brand, by credit card user clusters, June 2009
                                                                                                                                                  • Figure 95: Recent credit card company activity impacting resondent, by credit card user clusters, June 2009
                                                                                                                                                  • Figure 96: Credit card user activity, by credit card user clusters, June 2009
                                                                                                                                                  • Figure 97: Volume of credit card solicitations received, by credit card user clusters, June 2009
                                                                                                                                                • Demographic tables
                                                                                                                                                  • Figure 98: Credit card user clusters, by gender, June 2009
                                                                                                                                                  • Figure 99: Credit card user clusters, by age group, June 2009
                                                                                                                                                  • Figure 100: Credit card user clusters, by household income group, June 2009
                                                                                                                                                  • Figure 101: Credit card user clusters, by marital status, June 2009
                                                                                                                                                  • Figure 102: Credit card user clusters, by education group, June 2009
                                                                                                                                                  • Figure 103: Credit card user clusters, by employment status, June 2009
                                                                                                                                              • Custom Consumer Groups

                                                                                                                                                • Key points
                                                                                                                                                    • Figure 104: Credit card types owned, by gender and income, June 2009
                                                                                                                                                    • Figure 105: Credit card types used, by marital status, June 2009
                                                                                                                                                    • Figure 106: Credit card types used, by marital status and children, June 2009
                                                                                                                                                    • Figure 107: Card payment activity, by gender and income, June 2009
                                                                                                                                                    • Figure 108: Payment methods used, by education, June 2009
                                                                                                                                                    • Figure 109: Payment methods used, by gender and age, June 2009
                                                                                                                                                    • Figure 110: Credit card usage preference by category, ranked, by education, June 2009
                                                                                                                                                    • Figure 111: Credit card usage preference by category, ranked, by gender and income, June 2009
                                                                                                                                                    • Figure 112: Opinions about credit cards, by education, June 2009
                                                                                                                                                • Appendix: Trade Associations

                                                                                                                                                  Companies Covered

                                                                                                                                                  • American Express Company (The)
                                                                                                                                                  • Bank of America Corporation
                                                                                                                                                  • Bank of Montreal
                                                                                                                                                  • Bank of Nova Scotia
                                                                                                                                                  • Best Buy stores (USA)
                                                                                                                                                  • Best Western International Inc.
                                                                                                                                                  • British Airways Plc
                                                                                                                                                  • Canada Deposit Insurance Corporation (CDIC)
                                                                                                                                                  • Canadian Banker’s Association (CBA)
                                                                                                                                                  • Canadian Imperial Bank of Commerce
                                                                                                                                                  • Canadian Payments Association (CPA)
                                                                                                                                                  • Canadian Tire Corporation, Limited
                                                                                                                                                  • Capital One Financial Corporation
                                                                                                                                                  • Cathay Pacific Airways Limited
                                                                                                                                                  • Chrysler LLC
                                                                                                                                                  • CIBC World Markets Inc.
                                                                                                                                                  • Citibank
                                                                                                                                                  • Citigroup Inc.
                                                                                                                                                  • Costco Wholesale Corporation
                                                                                                                                                  • Fannie Mae
                                                                                                                                                  • Ford Motor Company (USA)
                                                                                                                                                  • General Motors Corporation
                                                                                                                                                  • Greenfield Online
                                                                                                                                                  • Home Depot (USA)
                                                                                                                                                  • HSBC USA Inc.
                                                                                                                                                  • Interac Association
                                                                                                                                                  • International Monetary Fund
                                                                                                                                                  • JPMorgan Chase & Co
                                                                                                                                                  • Marriott International, Inc.
                                                                                                                                                  • MasterCard Incorporated
                                                                                                                                                  • MBNA Corporation
                                                                                                                                                  • Mortgage Bankers Association (MBA)
                                                                                                                                                  • National Bank of Canada
                                                                                                                                                  • Royal Bank of Canada
                                                                                                                                                  • Shell Oil Products US
                                                                                                                                                  • Shoppers Drug Mart Corporation
                                                                                                                                                  • Sobeys
                                                                                                                                                  • Sony Corporation of America
                                                                                                                                                  • Staples, Inc
                                                                                                                                                  • Starbucks Corporation
                                                                                                                                                  • Toronto-Dominion Bank
                                                                                                                                                  • Visa U.S.A. Inc.
                                                                                                                                                  • Washington Mutual Inc

                                                                                                                                                  Canadian Credit Cards - US - September 2009

                                                                                                                                                  US $3,995.00 (Excl.Tax)