Credit Cards are a Big Issue for the ARM Industry

“To alcohol! The cause of… and solution to… all of life’s problems!” — Homer J. Simpson

I am pleased to welcome you to The Credit Card Issue, the latest in insideARM.com’s Big Issues content series. The Credit Card Issue is sponsored by IAT SmartDial, and will allow insideARM.com to bring original content about the bank card/credit card market — from the minds and computers of insideARM.com staff and a host of ARM industry experts — over the coming weeks.

IAT’s commitment to Big Ideas that are of key importance to ARM companies, and its investment in the day-to-day success of those firms, is a testament to IAT’s role as a thought leader in the credit and collection industry. I thank them; and we are all made a bit smarter as a result of their generous involvement.

So why are credit cards a big issue in the ARM industry? Consider this:

The credit card market remains the largest segment of the ARM industry. But as early as last December, insideARM.com has raised explicit concerns about the health of the industry’s cash cow. As Senior Editor Patrick Lunsford wrote on December 20, 2010: “Credit card debt is the lifeline of the debt collection, and broader ARM, industry. With near-universal adoption spanning practically every socioeconomic classification, credit card debt has been commoditized by banks, investors, and the ARM industry. Declining card volumes could be a new normal for ARM companies in the very near future. Banks simply will not have the inventory of charged-off debt that currently burdens them, and upon which the ARM industry relies.” Have market conditions changed since then? For better? For worse? Either way, a big, BIG issue.

Remember when people used to ask whether online shopping was “safe”? Remember when you could purchase an airline ticket in cash? And at a travel agent? Remember McDonald’s had cash registers? How many of your agencies accept consumer payments online? Oh yeah, well wax nostalgic my friends, because those days aren’t ever coming back.

For many consumers, even if credit cards aren’t an absolute necessity, they persist in the public imagination as a to-be-yearned-for commodity. This is nowhere more evident than in the promotion for Russell Simmons (prepaid) RushCard, a financial and cultural instrument. Credit makes you an American; credit makes you just like everybody else. Credit makes you somebody.

And that, finally, brings us back to Homer Simpson. Credit cards are a lot like alcohol: For consumers who use (and sometimes abuse them); for the banks, retail giants, and entrepreneurs who—at least until recently—always seemed ready to buy everybody another round (but only sometimes seemed to be there to take away the keys); and for companies like those in the ARM industry that, one can only hope, are here to help this country on its road to recovery. “To credit cards! The cause of… and solution to… all of life’s problems!”

Welcome to The Credit Card Issue. Here we go. For the next few weeks, we’ll be running articles daily that address the credit card sector. You can identify these articles by the stamp shown at right. Anytime you see this stamp, click on it to navigate to The Credit Card Issue main page.