Incumbents, brace for a turbulent 2023. Regulatory scrutiny and product innovation will broaden consumer payment choice, intensifying competition among providers. To preserve their standing among consumers and merchants, incumbents must face down threats to core revenue drivers and monetize new ones. Using media to win over customers will play a starring role.

Regulators Swipe at Credit Card Profits

Profit drivers will come under threat. Regulators will scrutinize three areas—consumer fees, consumer interest, and merchant swipe fees—while seeking to reduce user costs by encouraging market competition. Providers won’t welcome these moves: Almost $260 billion in credit card revenues is at stake.

Here’s how regulatory attention will play out:

• Issuers will prepare for increased consumer credit card switching. We believe the Consumer Financial Protection Bureau (CFPB) will require issuers to securely share consumer data with other providers at customers’ request. This will help consumers switch to issuers with better service or terms—and help competitors capture a slice of the 30.4 million credit card accounts that will be opened digitally this year.
• Proposed swipe fee legislation and CFPB interest rate scrutiny present longer-term profitability threats. We do not expect these efforts to result in new rules this year. But their focus on increasing choice and competition—not capping fees—gives them staying power.