Paperless Credit Card Statements

An interesting editorial in the American Banker by consultant Diogo Teixeira forecasts a paperless future for credit issuers. His company (Livermore Research, based in Wellesley, MA) estimates that card issuers could save about $2 billion a year by suppressing the printing and mailing of paper credit card statements. At the moment, Citigroup, American Express and Capital One offer such a program, but they are alone among large card issuers. Fewer than 1% of all cardholders have signed up. However, bottom-line pressures will force all major issuers to offer such programs within two years, according to Teixeira, as a means of cutting costs and encouraging use of the issuer's website.

To implement a paper statement suppression program, issuers need an acceptable e-statement. Teixeira lists several requirements:

• Statement must report credit card transactions

• Include an account summary, listing due dates, balances and credit limits

• Disclose how finance charges are calculated

• Add statement messages such as fee changes and other required disclosures

• Include "special offers", as electronic versions of the statement stuffers that accompany the paper statements.

Most issuers have accomplished the first two requirements on their websites, but few have advanced further. To avoid conversion problems within current card programs, Teixeira anticipates the launch of new card products that don't offer paper statements at all. Current examples include the Visa Buxx cards offered by Wachovia and U.S. Bancorp. Both charge cardholders a fee to get paper copies of statements.

One obstacle to a paperless statement is the absence of a remittance coupon. With such an account, cardholders are more likely to pay online at the issuer's website than by check. This presents a variety of upgrade challenges for issuer sites, including the ability to archive past statements that the cardholder can retrieve. Teixeira warns that attempts to push cardholders to paperless statements without the proper investment in website upgrades could result in increased traffic at customer service call centers and attrition.