From the outside, wallets look simple, peaceful, and serene. Yet on the inside, there’s a war going on. That war is being fought by card issuers jockeying for position as your go-to card. That position is called “top of wallet.”
So, why is this war being fought? Why can’t all the cards and issuers get along?
Well, there are a couple major benefits to being top of wallet.
Capturing Interchange Revenue
Let’s not beat around the bush: the main reason card issuers want a top-of-wallet position is because it makes them more money.
How much money?
The average American spends $857 per month on recurring charges. That includes things like
- Gym memberships
- Netflix, Hulu, and Spotify subscriptions
- Health insurance
- Automobile payments and insurance
- Cell phone and internet charges
Those charges add up much faster than most people expect. All those recurring charges come out to a significant sum of interchange revenue.
And that’s just recurring charges. Once you factor in groceries, housing, impulse buys on Amazon, vacations, and the occasional happy hour, you can see what kind of interchange opportunities card issuers get from being top of wallet.
Becoming the Primary Financial Institution
Not everything is about interchange income. Trust and convenience are equally important. We’ve seen that having a top of wallet card often leads to becoming the user’s primary financial institution.
People are much more likely to use additional products and services services offered by their primary financial institution than those from secondary or peripheral institutions. Services like:
- Savings accounts
- Home, auto, and personal loans
- Certificates of Deposit
Primary financial institutions are the first place people look for their financial services. Most of the time, other financial institutions manage a distant second place at best.
Financial institutions compete for top of wallet position for their cards because it opens up so many non-interchange opportunities. And, even if interchange is your only goal, being a cardholder’s primary financial institution still helps. It gives users the chance to see and apply for other cards they might want.
The Top of Wallet Benefits
Being top of wallet helps to capture interchange income from purchases and recurring charges. Not only do those recurring charges usually add up to quite a bit, but they’re just the tip of the interchange iceberg. If a cardholder puts recurring charges on a card, then it’s a high-use card and they’re likely to put other charges on it as well.
Plus, the convenience and trust built from having a top of wallet card pushes people toward using the issuer as their primary financial institution. That position provides many opportunities for other services and other revenue.
Lastly, being top of wallet matters for reputation. Some cards are more popular than others not because they offer better perks, but because they’re well-known. It may seem small, but brand visibility can certainly help with finding a larger market share.
Being top of wallet is obviously very important. But how can your card become top of wallet? How can it stay top of wallet?
Follow our blog to learn more about how to earn a larger market share and capture more interchange income—especially from recurring transactions.