Mar 14, 2010

Back to the future - charge cards, layaway, and other thoughts

Ken Chenault of American Express sees a resurgence in the company's traditional charge card, that's their pay-in-full product at the end of 30 days.

"Consumers want discipline," he says in a recent interview, "and if we can bring that discipline of paying in full at the end of the month along with the service levels that we provide, plus the rewards and other programs we have, we think that's a tremendous opportunity for us to grow."

Closed loop prepaid, otherwise known as gift cards in the US, is another area that is set to generate much more demand. Especially if retailers can eliminate the need for additional plastic cards that customers are tired of carrying around. Mobile phones and NFC are opening up possibilities here. All sizes of retailers will be keen on collecting money upfront for products and services that will be consumed later. Customers' new found desire for greater discipline could combine with retailers' need for liquidity.

Could we see layaway making a come-back? That's when people reserve an item in a store, make partial payments on it, and get to take the item home once it is fully paid for. This practice used to be very common, but pretty much disappeared when everyone was piling up credit.

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