MBNA, Capital One Lead in Credit Card Acquisition Mailings

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TARRYTOWN, NY - US credit card issuers dominate the Canadian market, with just two issuers - MBNA and Capital One - accounting for 65 percent of all acquisition mailings during one month last fall.

Americans are also far in the lead in the UK where three US firms - MBNA, Advanta's joint product with the Royal Bank of Scotland, and Capital One - make up 46 percent of all UK credit card acquisition mailings.

These are the findings of a study conducted by BAIGlobal Inc., a market research company for a broad array of products from package goods to credit cards, located here.

American Express has an anemic 5 percent share of the Canadian mail solicitation market and even less in the UK. But Chris Batenhorst, the company's VP of Competitive Tracking Services, noted that Amex is not a major mailer in the US either.

"They're a major player as a brand," Batenhorst said. "They do a lot of advertising. Their brand recognition is fantastic. Everybody knows them and corporate cards are held across the world so they don't need to be a big direct mailer."

Capital One and MBNA, however, made a conscious decision to go after the Canadian market.

"Capital One has an operation in Canada and actually mails from there," Batenhorst said. "It's a good market for them. They're doing well on the solicitation side. It's a smaller market than the US, of course, but it is also very similar."

Canada, Batenhorst said, today resembles the US market in the eighties when Capital One began its acquisition strategy at home, specifically testing the impact of different interest rates.

"Now they are taking what they learned here back then and applying it to the Canadian market. The language helps. With English everything is much easier."

Traditionally, he noted, banks have been credit card issuers in both Canada and the UK and charge much higher interest rates, up to 19.8 percent.

"We're really not seeing other issuers soliciting Canada," he said. "MNBA has 35 percent and Capital One has 30 percent. Royal Bank of Canada is next with 12 percent. It's a different mind set - the mass mailer versus the traditional bank.

"But when two companies share 65 percent of all solicitations, there is clearly room for competition, and we're beginning to see that in Canada too in the wake of the recent bank mergers up there."

The UK is larger and more sophisticated in the credit card area, Batenhorst believes. Nigel Morris, Capital One's second in command, is a Briton "and as a native of the country is sensitive to British needs.

"That's why companies who open in those countries are managed from the inside and why they make sure to hire the right people who understand the culture and the individuals who live in it," Battenhorst said. "In the UK, mailers tend to be much more creative in terms of art work and packaging. The goldfish card is a great solicitation. You're looking in a glass bowl with goldfish swimming in it."

Batenhorst expects other credit card issuers to move abroad.

He warned, however, that companies going overseas won't make it on price alone. "If you don't back your card up with service and benefits you'll just churn customers moving balances from one card to another," he said.

Most credit card issuers, however, are out to build market share through customer retention.

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