Barclay Card

The use of Credit fluffs started during the first half of the 20th century. The cards were initially used to make the process of recognition less complex and for confirmation of costumers when authorization was required by tellers for account purchases in retail stores. The process developed, and in the 1940s, some banks in the united states allowed customers to purchase goods and services, and have these charged to against their monthly bank charge account, rather than to a store account Development of competition Early contenders to Barclaycard emerged from their closest competitors.In 1966, prompted by the triumph of the bank americard network, members of the competing franchises formed the interbank card association (ICA), which was later to become known as MasterCard international. The ICA differed from bank americard in being an organization controlled by member banks which took obligation for promoting the MasterCard brand and for setting standards for security, authoriza tion, clearing and settlement systems between members. ICA went international in 1968 with an association with banamex.Barclaycards strategy in the commercialize has been associated with three continuing elements. The fist was the keep growth of the assign card market shown in exhibit 4. over the period 1989-9 the volume of realization card transaction grew at 7. 5 per cent, maculation debit cards grew at 40 percent. The number of credit cards in use increased by 5 percent by annum and the revalue of a transaction by 5. 5 percent p. a. The second factor was the relative success of visa, whose UK franchise was exclusively, enjoyed Barclaycard in the early years.Over the years, visa secured a flummox as the worlds most wildly used card, by 1998 accounting for $ 1. 4 trillion dollars of purchase or 55 percent of the ball-shaped market. Although the competition between visa and MasterCard was less clear cut in the UK Barclaycards visa had international acceptability with 16milli on merchants worldwide. Exhibit 5 suggests that although Barclaycard lost market share somewhat faster than the other major banks, the strength of visas international position to some extent offset Barclays insurance premium pricing.Profitability of Barclaycard Even though Barclaycard was the first and for a considerable amount of time, the only issuer of credit cards in the UK, Barclaycard made some losses during the first decennium of its operations, as the company built up its card and merchant volumes. In 1995, Barclaycard acquired 90,000 gold customers, and that launch increased Barclaycards market share of newly issued credit cards to more than 30 percent. Processing of Barclaycard transactions Transaction from paper to electronics introduced large economies of scale in processing.This innovation however was characterized by relatively juicy level, one off investments. Alternative strategic directions open to Barclaycard in its future development Barclaycard should team up more with other companies. For example, the co-operation with Sainsbury, gasoline marketer BP, and segment store chain Debenhams in launching new loyalty programs. With every Barclaycard purchase, shoppers should be able to collect points that can be exchanged for gifts like eating house meals, consumer goods, grocery shopping, flights, and cinema tickets.Barclaycard should also capitalize on the companys strong customer base by relationship marketing alliances, with leading organizations in other service industries like celnet, BT and Marks and Spencer. Evaluation of alternatives Suitability On the basis of suitability, the best alternatives available to Barclaycard are to ensure the continued ATM use of Barclaycard, and to ensure automation through a fully computerized transaction system. This is because cash withdrawal through ATMs is a major customer use of credit cards.The company should also endeavor to eliminate most of the paper work in order speed up the authorization pr ocess, and provide narrative statements for card holders. acceptability Barclaycards ability to monitor and measure credit risk is very crucial to its acceptability. In 2000, the volume of Barclaycard transactions rose by 12 percent, darn charges for doubtful and bad debts increased by 34 percent. Financial performance thus suggested that the companys managers have the responsibility to find customers who were in pauperization of rollover credit, and who were less likely to default on payments.Feasibility Barclaycard once proposed to charge non-customers heavily for victimisation its machines, a proposal that had to be withdrawn at that time due(p) to heavy persecution from the press. This is not a very good strategy, and should be avoided. Recommended alternatives Barclaycard strategy in the credit card industry has been associated with the continuous growth of the credit card market, its ability to avoid price competition by branding, and also, the relative success of Visa.Barc laycard should strive to avoid price competition by branding and by using technological developments within the card networks. This is because the intensity of the competition in the credit card business tends to lead to the best credit worthy customers gaining access to credit far more cheaply. Thus it is quite difficult for credit card transaction volumes to increase quickly without inflicting bad and doubtful debts to credit card users.