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Pie slices vary widely given individual card portfolio specifics

• Points, miles, and rewards card portfolios typically have a lower revolving rate, less finance revenue and less credit losses.  They also typically have a higher usage rate and interchange revenue.  Many also charge an annual fee (one of the components of the "Other Fees" category.)  Most other types of portfolio types do not charge an annual fee.
• Sub-prime card portfolios (for those with lower FICO scores) typically have a higher revolving rate, higher interest rates, more finance revenue, and more credit losses.
• More risk-adverse Issuers (e.g., community banks and credit unions) typically  have lower credit losses.  They are also likely to have lower activation and usage rates.
• Portfolios with above average profitability typically target people with non-stellar FICO scores (e.g., medium and sub-prime credit worthiness).  
  
  Finance charge revenue is the vast majority of total revenue for a credit card portfolio.  People in the medium and lower credit worthiness cohorts typically have a greater need for credit and have fewer alternatives to using credit cards.
• Often misunderstood, Visa and MasterCard do not grant credit or underwrite credit cards accounts.  They do not receive any finance charge revenue from credit card accounts.  That is managed solely and completely by Issuers (e.g., Chase, Citibank, Wells Fargo, and others).
• With a few small exceptions, Visa and MasterCard do not receive interchange revenues. (Interchange fee revenues flow to Issuers - except ATM interchange that flows to ATM owners.)
• Visa and MasterCard receive the vast share of their revenue from brand fees and processing fees they charge to Issuers, Acquirers, and Processors.  Brand and processing fees are calculated based on Issuer and Acquirer transaction volumes processed.

© 2023 Robert Holden

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