|Photo: Hoag Levins|
|Discover's Discover 2Go card helped to popularize the new trend.
MasterCard International has launched the MasterCard SideCard in the U.S., following last year's introduction of Discover 2Go by Discover Financial Services and a minicard version of Visa from Bank of America Corp. Burnie Hunter, vice president of product development at MasterCard International, said several U.S. issuers of MasterCard have shown interest and at least one is likely to launch before the end of the year.
14,000 Visa USA issuers
Next month, when Bank of America's exclusive one-year deal expires, more than 14,000 Visa USA issuers will be able to offer the cards, and a spokesman said a number have expressed interest. Additionally, American Express Co. is testing Express Pay, a key chain fob that emits a radio signal that can be read by specially equipped terminals that charge the cardholder's account.
A Bank of America spokeswoman said the bank has issued over 13 million minicards -- either Visa credit or debit Visa Check Cards -- in the program's first year. Discover Financial Services would not disclose numbers, but a spokeswoman said Discover 2Go is "one of our most popular cards."
"They're looking to open new markets and one way is to make [the cards] more ubiquitous. The key chain is ubiquitous. ... It's focusing on something that always scores high with consumers -- convenience," said Richard Crone, a principal of Crone Consulting, a San Carlos, Calif.-based consultant to the payment industry.
And indeed, the marketing of the minicards so far has focused on convenience. Bank of America's spots, from Interpublic Group of Cos.' Deutsch, New York, just show the card being brandished on a key chain. The Discover 2Go campaign, from Omnicom Group's Goodby, Silverstein & Partners, San Francisco, shows customers so enthralled by the card's ease of use that they test them in very inappropriate ways, to fight off killer ninjas or cut a tangled fishing line.
In the first six months of the year, Discover spent $35.8 million to advertise all of its programs, according to TNS Media Intelligence/CMR. MasterCard doesn't plan to advertise the cards as part of its "Priceless" brand campaign and is leaving the marketing to its member institutions.
Curbing cash spending
The credit-card companies are all chasing after the large untapped volume of cash and check purchases that still make the bulk of U.S. sales transactions. And it's not just marketing hokum, said card company executives. They note minicards -- which are currently available in several overseas markets, including Hong Kong and Mexico -- encourage consumer use for small purchases at places such as grocery and convenience stores where cash is still king.
Those may be small-ticket purchases, but consider that credit-card sales only make up 3% of U.S. total sales volume, noted Mr. Hunter. MasterCard's market research also found the 18 to 39 age group showed the most interest in the minicards, and those consumers are more likely to use them in fast-food and convenience stores, venues where credit-card volume is traditionally low, Mr. Hunter said.
Cool, new, non-traditional
"It's cool, it's new and it's non-traditional. Those are all important to that age group," Mr. Hunter said.
For credit-card companies worried about growing sales volume in an uncertain economy, that represents a lot of found money. Tony Mitchell, American Express' vice president of public affairs, claimed the Express Pay test -- started in July among 200 Phoenix merchants -- has reported a 20% to 30% increase in spending per transaction.