In Pursuit Of The Affluent Cardholder

Not surprisingly, credit card issuers are attracted to consumers who not only use their cards often and spend a lot, but who also pay on time. When the latest recession hit, many issuers weeded out their riskiest cardholders, but many who remained in their portfolios became more conservative in their card spending.

Issuers, and the bankcard networks supporting their cards, therefore have shifted their attention to affluent sectors of society to grow their transaction and sales volumes, and they continue to do so today. And for good reason, as households earnings $100,000 or more represent about 20 percent of overall U.S. households, but 70 percent of credit card spend, according to David Chow, Visa vice president and head of consumer credit products.

“It’s certainly a very outsized weight of spending volume that occurs with Visa, with these affluent households,” he said.

Signs are pointing to an improving economy and that will result in renewed growth in card use among traditional mass-market cardholders. That growth, in turn, will only complement the efforts over the past few years to encourage affluent consumers to use their cards more often through rewards and services designed specifically for them, often at annual cost of $200 or $300 per card.

How issuers and the bankcard brands, namely MasterCard and Visa, view the affluent market can vary. The networks tend to have specific views and strategic breakouts based on set income levels. Issuers, while finding such metrics useful, in the end have as their goal attracting customers with rich rewards and services, often with the help of the networks supporting their cards.

Defining  ‘affluent:’ the bankcard networks’ view

Most U.S. issuers rely on Visa and MasterCard to provide the core services for the cards they provide their wealthier customers, and then refine those with their own rewards and other perks. So it helps to understand how the brands view and define the affluent market and how they hope to draw interest from not just issuers, but the targeted consumer as well.

In defining the wealthier market segments, MasterCard defines “mass affluent” consumers as those who earn $100,000-plus in individual income, or households earning $350,000 or more. It considers “high net worth” consumers as those representing the top 1 percent of U.S. earners, which would be a far cry from the “mass market” customers earning less than $100,000.

Visa similarly has a $100,000 floor, with the “mass affluent” cardholder earning as much as $150,000. It then further defines the affluent market into the “core affluent” segment, where cardholders earn between $150,000 and $400,000, and then the “high net worth” segment representing households earnings more than $400,000 or that have more than $1 million in investable assets. Visa then goes even an extra step higher, the ultra high net worth segment, where the floor is $5 million in investable assets.

How the networks define the affluent segments, in turn, helps to understand how and why they generate products for each. Indeed, each affluent cardholder segment has its own particular needs and wants, not to mention expectations. “It’s not a homogenous group,” Visa’s Chow said. “Obviously, there are needs and preferences and so on.”

In some cases, affluent consumers may have obtained their wealth from small businesses they own, though neither card brand segments the small-business card market the same as it does for consumer cards. In fact, most issuers likely don’t know what wealthy commercial cardholders are doing with their consumer cards. As such, the consumer card market has specific products and services for affluent cardholders, regardless of where they earned their income.

In terms of specific programs, each card brand offers products tailored to meet the needs of specific affluent segments and each has its own perspectives on the affluent market.


MasterCard’s consumer segmentation is aligned with how its issuing partners define them, especially as it pertains to the high net worth customers, Diana Robino, the company’s senior vice president in charge of global affluent products, said. “For some banks, it will be $5 million-plus. For other banks, it will be $1 million,” she said. “We tend to look at the top 1 percent of (a particular) country and we build up our value proposition to attend to those customers’ needs.”

As a global company, MasterCard’s products for affluent customers are consistent in the services and benefits the card brand offers worldwide, even though programs may vary by country or region. The MasterCard Black card, for example, is designed for Latin America’s wealthiest cardholders, while the World Elite MasterCard has that role in the U.S., Europe, Asia Pacific and the Middle East, Robino said.

“The World Elite and Black brands are really at the pinnacle of our product set,” Robino said. “We also have our World Card and the Platinum MasterCard and World Reward brand in many regions.”

The World Elite and MasterCard Black cards are designed for the most affluent portfolios in any region. These cards cater to the passions of the high-net-worth customers and so they include rewards, experiences and services tied to travel, arts and entertainment. “Above all, they aim to deliver peace of mind, founded in the trust that MasterCard’s safety and security features are included in their premium cards,” Robino said.

MasterCard contends its World Elite and MasterCard Black cards fulfill every need of the affluent traveler by offering high-value services, from a personal travel advisor to a personal airport concierge. They also support chauffeured car and limo services, access to more than 600 airport lounges around the world, the Global Entry program, a private jet program, a cruise and vacation tours feature, and a leading collection of luxury hotels and resorts, Robino said. The services are delivered via a “best-in-class” concierge service that can help with setting up anything from a babysitter to buying gifts and delivering to countries around the world, or getting tickets to a favorite shows, and enabling access to hard to book restaurants and hotels, she said.

To enhance cardholders’ peace of mind, the cards include benefits and insurance to ensure the safety and security of the traveler. “Emergency services are important to our customers, especially those travelling with families,” Robino said. “For high-net-worth customers, this is a product that is shared with their immediate family.”

Specific experiences also are of particular interest to the high-net-worth cardholder around the world. “The affluent have access to a lot and services that drive their passions are especially sought after,” Robino said. “Excellence in service is key, and they’re definitely looking for convenience and to save time in coordinating for travel, so they are interested in a card that gives them access and exclusivity when away as well as at home.”

But there are differences between the mass affluent and the affluent. Mass affluent cardholders are budget-conscious and consider what their card has to offer in terms of rewards, while the affluent prioritize peace of mind, access and status, Robino said, noting that travel services are at the heart of both segments.

“Travel has become a trend across the board,” she said. “It’s not limited to a specific customer set or a life stage, it is reflection of their best lifestyle.”


Just as MasterCard offers specific products for affluent cardholders, so, too, does Visa–the Visa Signature and Visa Signature Preferred. Visa Signature is a platform on which issuing banks can build feature and reward rich products.

“Take the Chase Palladium card, which I think is an extremely strong competitor to the (American Express ultra exclusive ) Black Card kind of mystique. That’s built on a Visa Signature Preferred platform,” Chow said. “There are multiple other examples of issuers that have basically built what they believe supports their own business strategy and their own business goals and serve their cardholders off the back of these platforms.”

With Signature, Visa provides various travel benefits, product and service deals, and luxury-hotel benefits, and a long list of other perks designed to attract the interests of the wealthiest cardholders. “They’re the kinds of things that we bring, and then issuers kind of build on top of that to attract the affluent market,” he said. “So, you know, Chase will build a United (Airlines) product, and we’ll add on top of that all the benefits that come from the United relationship, for example. So that’s our core offering, and that’s very much targeted at the mass and core-affluent segment.”

Signature Preferred supports activities behind the scenes, such as the infrastructure and support issuers use to build richer products for their highest spending cardholders. “That’s really the kind of product built for the upper core affluent and upwards, and so if you look out there in the market there are Visa Signature cards that are targeted at their very high end that often are distributed to private banking or wealth management customer bases among our issuing banks, and they would typically be, internally anyway, designated user Signature Preferred,” Chow said.

Moreover, while signs are pointing to credit card balance improvement, it’s still not where it was pre-recession, Chow noted. So that means that driving spending on credit cards is and remains very important for issuing banks, he said.

“And who are the folks that are actually driving spending and driving spending growth? Well, that’s the affluent,” Chow said. “The affluent consumers are the folks that are using their credit cards as a spending vehicle. And so I would think that’s really the primary reason why there’s a huge amount of focus on the affluent at the moment.”

Such customers, however, have their own specific wants and needs. Travel is universal, but the incidents and style of travel can vary even within the wealthy segments. Their interests and hobbies also are similar, with going out to movies and dining being chief among them, Chow said. Service expectations also are high, and across all the affluent segments cardholders expect high-quality and personalized service, he added.

Interestingly, affluent consumers tend to be highly digitized, despite their relatively high age group. As such, while they like personalized service, they also like to do things themselves, Chow added. “That’s something that we’re tracking very closely and eagerly in the continuing research that we do,” he said.

Cap One: An issuer perspective

Although the bankcard brands focus on identifying affluent consumers by income or level of wealth in determining their products and services, issuers work directly with the cardholders. What they emphasize is somewhat different, especially when addressing the affluent sector.

At Capital One, for example, meeting customer need is priority one, Grayson Clarke, who heads up the issuer’s head Venture Card business. Venture launched in 2010 and is Cap One flagship rewards card, which includes both rewards the issuer provides plus those support through Visa’s Signature program, Clarke noted. “It’s a travel rewards product designed to be easy to use and understand,” he said.

For every dollar spent, cardholders earn two miles they can redeem for any travel purpose, from airline tickets to hotel rooms to Uber or taxi rides to the airport. The card comes with a $59 annual, which Cap One waives the first year. A separate, free card, called QuickSilver, is a cash-back product that earns 1.5 percent cash back on purchases.

Both cards enable cardholders to set up text or email alerts for different purposes, such whenever the card is used to spend over a certain dollar amount. A “Second Look” program enablers cardholders to easily identify specific things in their card statements, such as recurring charges, automatic billing, annual memberships that show up and other expenses that might other surprise them when they appear, Clarke said.

Cards also come with a free credit-tracker tool that enables cardholders to see their credit score month to month and set alerts if, for example, their credit standing changes on their credit reports should an unauthorized person seek a card using their credit, Clarke said. Cardholders also can see what ordering a new card would do to their own credit score.

Clarke declined to say how much revenue affluent cardholders generate for Cap One, but he said it is an important segment for the issuer. “It’s certainly a rapidly growing area for us,” he said.

Because of the amount of sales and transaction volume running through their cards, affluent customers have different needs, including in trying to get a better understanding of their card use, setting up dispute resolutions and transactions with different vendors. Their rewards program needs also are stronger because of the amount of miles or cash-back rewards they earn and want to redeem, Clarke said.

In terms of general trends, airline consolidation is affecting the rewards market, Clarke said. The top four airlines now support 83 percent of passengers, up from 56 percent in 2000. As a result, flights have less seats available, he said.

“Most affluent spenders don’t pay attention to those changes, but if you’re not paying attention and go to use rewards and the number of miles required has gone up or the deal changes, that could be frustrating,” Clarke said. “Consumers who care about and use rewards are being affected by that quite a bit.”


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