The profit model of the credit card business The credit card industry should not simply pursue the number of cards issued and used. The issuance and use of credit cards must be subject to the profit targets stipulated in the business model. In our country, the credit card business is still operated by commercial banks, which are both issuing banks and acquiring banks. The following discusses the profit model of credit cards from two aspects: the issuing bank and the acquiring bank.

Interest income is the interest paid by the cardholder on the outstanding credit card balance; information exchange income is the fee paid by the acquiring bank to the card issuing bank accounting for a certain percentage of the transaction amount of the special merchant; the annual cardholder fee is Fees paid by the cardholder to the card issuer for the right to use a credit card; other fees and income include fees and income generated from various other credit card services, such as cash advance fees, loss report fees, express Card issuance fees, replacement transaction password letter fees, etc.; capital cost is the interest cost that the card issuer must pay to obtain the unpaid balance of funds in the bank's credit card asset portfolio; losses include bad debt losses, credit card fraud losses, etc.; service fees That is, the costs incurred by the front-end and customer contact; transaction processing costs are the costs incurred by the back-end for customer service.

Specialized merchant rebates are the fees charged by the acquiring bank to special merchants for providing transaction processing and assuming credit risks; deposit interest income is the deposit interest income obtained from the deposit accounts of special merchants; other income That is, income from renting POS and card presses, etc. Among the profits from the credit card business, 78% comes from credit interest income, 10% comes from interchange fees, 2% comes from annual fees, 4% comes from cash withdrawal fees, and 6% is late payment and other income.

There are also some units that focus their profits on defaults and excessive fines, thus forming a new credit card business model. This profit model is a credit card with a low credit limit issued by the card issuer for consumers who have difficulty applying for consumer loans. On the one hand, a low credit limit causes cardholders to easily default and exceed their limit, thereby increasing fine income; on the other hand, a low credit limit can reduce personal and overall credit risks.