Barclay Card

The use of Credit separate started during the scratch half of the 20th century. The fluffs were initially utilise to make the fulfil of identification 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(prenominal) banks in the united states allowed customers to buy costlys and services, and have these depositd to against their monthly bank carriage account, rather than to a store account Development of contest aboriginal contenders to Barclaycard emerged from their closest competitors.In 1966, prompted by the success of the bank americard network, members of the competing franchises formed the interbank card familiarity (ICA), which was later to become known as MasterCard international. The ICA differed from bank americard in world an organization controlled by member banks which took responsibility for promoting the MasterCard brand and for settin g standards for security, authorization, get toing and settlement systems between members. ICA went international in 1968 with an association with banamex.Barclaycards strategy in the market has been associated with three continuing elements. The fist was the continued growth of the attribute card market shown in exhibit 4. over the period 1989-9 the account book of credit card transaction grew at 7. 5 per cent, duration calculate cards grew at 40 percent. The number of credit cards in use improverd by 5 percent by annum and the prize of a transaction by 5. 5 percent p. a. The second constituent was the relative success of visa, whose UK franchise was exclusively, enjoyed Barclaycard in the early years.Over the years, visa secured a position as the worlds most wildly used card, by 1998 accounting for $ 1. 4 trillion dollars of purchase or 55 percent of the global market. Although the argument between visa and MasterCard was less clear cut in the UK Barclaycards visa had int ernational acceptability with 16million merchants worldwide. manifest 5 suggests that although Barclaycard lost market sh ar somewhat faster than the different major banks, the strength of visas international position to some extent offset Barclays premium pricing.Profitability of Barclaycard Even though Barclaycard was the freshman and for a considerable amount of time, the only issuer of credit cards in the UK, Barclaycard made some losses during the first decade of its operations, as the come with built up its card and merchant volumes. In 1995, Barclaycard acquired 90,000 gold customers, and that put together increased Barclaycards market share of newly issued credit cards to more than 30 percent. Processing of Barclaycard transactions Transaction from paper to electronics introduced vainglorious economies of scale in processing.This innovation however was characterized by relatively high up level, one off investments. Alternative strategic directions open to Barclaycard in its futurity development Barclaycard should team up more with other companies. For example, the co-operation with Sainsbury, gasoline seller BP, and department store chain Debenhams in launching new commitment programs. With every Barclaycard purchase, shoppers should be able to collect points that can be change for gifts like restaurant meals, consumer goods, grocery shopping, flights, and cinema tickets.Barclaycard should also capitalize on the companys strong customer base by kindred marketing alliances, with exserting organizations in other service industries like celnet, BT and attach and Spencer. Evaluation of alternatives Suitability On the basis of suitability, the best alternatives available to Barclaycard are to ensure the continued ATM usage of Barclaycard, and to ensure automation finished a fully computerized transaction system. This is because cash withdrawal through ATMs is a major customer use of credit cards.The company should also elbow grease to elimin ate most of the paper work in order swiftness up the authorization process, and provide narrative statements for card holders. Acceptability Barclaycards ability to monitor and measure credit risk is very life-or-death to its acceptability. In 2000, the volume of Barclaycard transactions rose by 12 percent, while charges for doubtful and bad debts increased by 34 percent. Financial deed thus suggested that the companys managers have the responsibility to find customers who were in need of rollover credit, and who were less likely to default on payments.Feasibility Barclaycard once proposed to charge non-customers heavily for using its machines, a proposal that had to be withdrawn at that time due 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 dogging growth of the credit card market, its ability to avoid price competition by brandi ng, and also, the relative success of Visa.Barclaycard 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.