The further rise of premium cards


This is an excellent article in the Australian Financial Review about what the Big Retailers Coles, David Jones and Woolworths are now planning or have implemented their own premium cards.

These retailers have the scale to achieve by themselves a dramatic shift in the market. The big banks love it because by driving consumers into these corporate cards they get a premium fee. Who pays those higher premium fees? The answer is YOU the retailer. I blogged about it earlier.

Here is how it works. I as a consumer get a BP CITIBANK premium card because BP gives me 5% off. Not a bad deal for me, the consumer. However, when I use this card at a newsagency because it is a premium card, the credit rate charged to the newsagent is much higher.

In some newsagencies about 40% of their turnover now is in cards and with these premium cards growing at a rapid rate, these fees are going to become a major expense.

It does make the Tyro offer look better probably as they are not the issuer of these cards so they do not have this interest like the big banks, in pushing these cards. I can see that one of our rivals is now following us again on Tyro as well. Good for him too, as much of these big organisations loyalty programs are being funded now though premium cards by smaller retailers.