BankCard Margins are Declining?
BankCard Margins are Declining?
If you are an ISO who is selling Bankcard services, this comes as no surprise to you. The Green Sheet, The Nilson Report, Credit Card News, have all reported the decline in Bankcard profit margins, and at the most recent BSA meeting First Annapolis Consulting, Inc., presented a similar conclusion to the BSA.
The average basis points of potential profit (The difference between the merchants "effective" discount rate and Bankcard interchange) fell in the 85 to 87 basis point range in the early 1980's.
By 1990, (which corresponds with the final stages of first generation point-of-sale terminal deployment) the average basis point spread had bottomed at 69 to 70 basis points, a decline of 20% over the decade.
While experts may not agree completely on what the future holds, there seems to be general agreement that the Average Net Spread or Basis Points of Bankcard income will decline through the end of the decade.
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