This paper should explore the different credit card markets around the world and give a general introduction regarding the topic, and then analyzing how issuers are able to make money out of these products. A Market Analysis and Trends in Payment Processing is needed. This thesis is focused on the US and European market (EU and UK, with reference to France, Italy, Germany); therefore, it should analyze the differences between these two credit markets. Different Regulations should also be considered (EU regulations especially) A main question of the paper is: “How can cash-back and credit rewards programs be so profitable to US credit card issuers?” (focus on merchant fees shared between issuer and customer. Where do issuers get the most profits? late fees?) A following question is: “Why is Europe so behind in terms of credit card loyalty programs compared to the US?” “Can the US business model be exported in Europe in a profitable way for both customers and issuers?”. Analyzing the psychology and education behind the attitudes toward “credit” in Europe and US should also be considered – maybe using statistical data from the European Social Survey and linear regression models . Europeans tend to carry less debt compared to Americans, and are generally more debt adverse. Also, credit cards in Europe are way harder to obtain, there is no credit score, and regulations are stricter. AMEX is one of the few card issuers in Europe that do have a membership rewards program. However, fees are way higher and benefits/rewards significantly lower compared to the US” (Why is that so? Could the US model work in Europe, opening up a whole new profitable market to banks and card issuers?) preliminary analysis of the literature cited is needed to define the objectives of the report The quality of the work cited is extremely important.
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