Citigroup hits another Costco hurdle
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Citigroup is still experiencing hurdles after purchasing the roughly 11 million cardholder Costco portfolio from American Express earlier this summer.
Last week, the firm mistakenly emailed a “small portion” of Costco members telling them that their membership had ended and their cards would be canceled, according to Business Insider. Citigroup has since notified the affected consumers that the message occurred as a result of a “systematic error.”
The error marks another in a series of problems that Citigroup has faced managing the transition.
In the week following the transition, the company fielded multiple complaints from consumers who hadn’t received new cards or were struggling to activate them and couldn’t get the necessary support. Despite that, the portfolio has been performing well, giving Citi $5.7 billion in purchases made on Citi Costco cards in its first three-and-a-half weeks.
But ongoing errors could begin to turn off consumers and increase cardholder attrition, particularly since Costco now accepts any Visa card, not just the Citigroup-branded Costco card. That would limit the potential financial impact of the portfolio, which could give Citi over $80 billion in annual billed business and help it further establish separation as the third largest US card issuer this year.
Citigroup is just one piece of the larger payments ecosystem, which contains card issuers, processors, merchants, gateways, and more.
Evan Bakker and John Heggestuen, analysts at BI Intelligence, Business Insider's premium research service, have compiled a detailed report on the payments ecosystem that drills into the industry to explain how a broad range of transactions are processed, including prepaid and store cards, as well as revealing which types of companies are in the best and worst position to capitalize on the latest industry trends.
Here are some key takeaways from the report:
2016 will be a watershed year for the payments industry. Payments companies are improving security, expanding their mobile offerings, and building commerce capabilities that will give consumers a more compelling reason to make purchases using digital devices.
Payments is an extremely complex industry. To understand the next big digital opportunity lies, it's critical to understand how the traditional credit- and debit-processing chain works and what roles acquirers, processors, issuing banks, card networks, independent sales organizations, gateways, and software and hardware providers play.
Alternative technologies could disrupt the processing ecosystem. Devices ranging from refrigerators to smartwatches now feature payment capabilities, which will spur changes in consumer payment behaviors. Likewise, blockchain technology, the protocol that underlies Bitcoin, could one day change how consumer card payments are verified.
In full, the report:
Uncovers the key themes and trends affecting the payments industry in 2016 and beyond.
Gives a detailed description of the stakeholders involved in a payment transaction, along with hardware and software providers.
Offers diagrams and infographics explaining how card transactions are processed and which players are involved in each step.
Provides charts on our latest forecasts, key company growth, survey results, and more.
Analyzes the alternative technologies, including blockchain, which could further disrupt the ecosystem.
To get your copy of this invaluable guide, choose one of these options:
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