Recent bank mega-mergers face formidable challenges as they take enormous credit write-downs and integrate their technology systems. Moving forward their vast branch footprints (national or mega-regional) will allow each bank to focus on low cost, low-risk branch-based card acquisitions. The biggest banks are the biggest card issuers and they will slug it out between each other as smaller issuers try to protect their existing portfolios while poaching from their big new neighbors.
We will see the roll-out of impressive new national merchant funded discount networks that will feature huge national brands and strong regional retailers in a Chinese menu of discount options.
We will see a surge of purchasing activity moving from credit to prepaid and debit as consumers try to gain greater control over their budgets and increasingly protect themselves from overdraft and other retail banking fees. As the economy continues to sour, we will see higher rates of card fraud.