Analysis Of Credit Card Profitability Pattern Based On The Two-sided Markets Theory

China's credit card industry only has more than 20 years of development history, which is in the early stage of development. Credit card business has gradually become the indispensable core business for the strategies of commercial banks. Lots of banks see to the credit card business as an important future profit growth point, so occupying the market quickly has become the goal of these banks. Most of the banks issuing credit cards indiscriminately brought some problems that can not be ignored to the credit card industry. Over the years, the profitability of credit card business is not strong and the proportion of sleep cards is increasing. The increasing risk of credit cards brings bad debts to the banks. This paper attempts to sum up a proper profitability pattern for our country in the framework of the two-sided markets theory.We can learn from the experience of mature credit card markets, combined with our national conditions to seek an effective profitability pattern. Therefore, this article analyzes the profitability pattern in USA and Japan, to see their business model objectively and then learn and use their development experience selectively. As the credit card industry has typical characteristics of two-sided markets, the entire market system should be considered through the analysis. This paper discusses the status and the role of China Union Pay as a platform for the two-sided markets. China Union Pay is the core and hub for the bank card industry. China Union Pay's pricing strategy has dampened the enthusiasm of commercial tenants to accept card payment, which is not conducive to the development of card acceptance environment. This paper has proposed some measures on these problems. One of the key content is to analyze the credit card usage behaviors of the consumers and commercial tenants, to consider how the environment can influence the behaviors of consumers and merchants from bank card business strategy on commercial tenants. It is close to the present status of our credit card market, therefore the analysis has certain practical guiding significance. It's not enough to only consider improving the profits, reducing the losses caused by risks is also important to improve the profitability of credit card. To occupy the market and ignore the potential risks may bring disadvantageous to the entire financial system. Therefore, another key content in this article is to analyze the risk aversion of credit card. Asymmetric information in credit card business is inevitable, so we can only minimize the extent of information asymmetry. Therefore, this article has built commercial banks credit card competition model of under asymmetric information and try to analyze which strategy can help commercial banks to avoid the risks effectively and reduce the bad debts losses. The conclusion is that commercial banks should use the maximum differentiation strategy and the following contents discuss some risk control strategies in detail: market segmentation strategy, differentiated marketing strategy and brand strategy. These strategies are not independent, but contact with each other closely. Commercial banks can choose one or several strategies with their own conditions. These strategies can be seen as the specific ways for the differentiation strategy.