How E-Commerce Is Changing The Face Of Retail Credit

There was a time when just about every big brick and mortar retail store had their own store credit card. The stores would offer incentives for consumers to use their retail card. E-commerce has not only changed the way that people make their purchases — now mainly online instead of in the store — it is also changing how consumers finance the things they buy.

Some predictions erroneously believed that sites like Amazon are going to take over the world. Those predictions are starting to look less and less erroneous as e-commerce continues to overtake other retail options. It isn’t just that many big name stores are shutting their doors; it is also that retail credit cards no longer seem to have much of a place in the credit world.

Due to the deals that e-commerce sites like Amazon can offer consumers, cards like the Amazon Prime credit card are taking over the online credit shopping industry. Promotions like Prime Day on July 11th, where Amazon offered a 20% cashback bonus for using their credit card, are making consumers switch their credit decisions.

It used to be that you had only a handful of options across companies like MasterCard, Visa, Discover and American Express. Now even the primary cards are being overshadowed by the emerging use of e-commerce credit. With the debut of the Prime credit card just this past January, the card entitles users to no annual fees and cashback bonuses for purchases made at restaurants, gas stations, and drugstores, along with slightly smaller bonuses for all purchases made with the card.

So it isn’t just that consumers are ditching their retail store cards; it is likely that they will start to switch over to the Amazon card and shop on the site that offers anything you want in one place. Not only will brick and mortar retail stores be a thing of the past; also at risk are commercial cu cards online that might not be able to offer the same advantages for use.

The reason many people are foregoing their retail cards is because as more people shop online, the stores they are no longer shopping at are shutting down. That leaves the consumer miles away from their local store and having no real use for the store card. Many “co-branded” credit cards, which are retailer cards that carry a major credit card’s name and is issued by a major card company, are all but disappearing.

Major retail stores that used to be a staple in people’s lives like Macy’s, Sears, and JCPenney are shutting the majority of their stores down due to low sales and fewer in-store shoppers. The biggest problem is that as store cards continue to drop off, not only are the consumers failing to put money toward paying off their retailer card balance, but the interest rates on the cards continue to climb, putting the consumer in a financial hole.

Amazon isn’t the only player on the e-commerce field. Just this April, the Altitude Reserve Visa Infinite Card was unveiled as an alternative to traditional credit cards. It offers consumers as many as triple the points on their purchases when they use their “mobile wallet,” which includes using options like Samsung Pay, Apple, Microsoft Wallet or Android Pay. As this does away with physical cards altogether, many consumers find that it is a welcomed convenience. They no longer have to worry about carrying or misplacing their wallet; it is all stored and kept on their mobile device.

It is possible that many brick and mortar stores aren’t going to go down without a fight. Their response might be to increase their bonuses and to offer various incentives for using their retail card. To keep consumers from completely switching over, they might try to sweeten the pot to bring the consumer back.

Carrying just one balance or one credit card means that the consumer has a lower threshold to put themselves into financial trouble. If you only carry one card, then it becomes more difficult to go over your spending limit or to keep a whole bunch of revolving balances. Whether Amazon will take over the world or not remains to be seen, but what is apparent is that it has forever altered the way consumers both make and  finance their purchases.

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