Macquarie Bank takes over from HSBC

[bismarck]

Where is the primary profit for a cc operation ?

For those who are interested....

The revolver business model (I.e. the regular credit cards) make:
- 15% of their revenue from card fees
- 15% from interchange fees; and
- 70% from finance charges (i.e. interest)

This contrasts with the transactor business model (which is mostly the ultra premium cards like Citi Prestige and the Amex charge cards) who make:
- 13% of their revenue from cardholder fees;
- 25% from finance charges; and
- 62% from interchange fees

So the premium cards make the from the HNW individuals who pump heaps through the card, whereas the lower value cards (like WOW) are trying to get people to carry a balance as their business model is predicated on the interest rates they charge.

 

[Princess Fiona]

For those who are interested....

The revolver business model (I.e. the regular credit cards) make:
- 15% of their revenue from card fees
- 15% from interchange fees; and
- 70% from finance charges (i.e. interest)

This contrasts with the transactor business model (which is mostly the ultra premium cards like Citi Prestige and the Amex charge cards) who make:
- 13% of their revenue from cardholder fees;
- 25% from finance charges; and
- 62% from interchange fees

So the premium cards make the most the HNW individuals who pump heaps through the card, whereas the lower value cards (like WOW) are trying to get people to carry a balance as their business model is predicated on the interest rates they charge.

Awesome info, thanks for that.
I can see why I'm not an attractive customer of the silver doughnut

 

[ellen10]

For those who are interested....

The revolver business model (I.e. the regular credit cards) make:
- 15% of their revenue from card fees
- 15% from interchange fees; and
- 70% from finance charges (i.e. interest)

This contrasts with the transactor business model (which is mostly the ultra premium cards like Citi Prestige and the Amex charge cards) who make:
- 13% of their revenue from cardholder fees;
- 25% from finance charges; and
- 62% from interchange fees

So the premium cards make the from the HNW individuals who pump heaps through the card, whereas the lower value cards (like WOW) are trying to get people to carry a balance as their business model is predicated on the interest rates they charge.

Very interesting information

 

[cove]

I wonder how they recorded ATO payments where the rich 0.42% needed to be carved up.

 

[amaroo]

I wonder how they recorded ATO payments where the rich 0.42% needed to be carved up.

ATO transactions super-sized the HNW numbers. lol

 

[DeKa]

Not quite correct ComeFlyWithMe.....I bet you make heaps for them with what they charge the people you use your card with ??? Just because YOU don't pay them interest does not make you an unprofitable customer.
Work it out, you might put $ 250/$300K through your card annually at about 1.5 % charge out for them = $ 4/5,000 from YOU using THEIR card.

It wouldn't be that much. The merchant fee is split multiple ways - acquiring (merchant) bank, scheme (Visa, MasterCard etc), gateway and issuer.

 

[ComeFlyWithMe]

Not quite correct ComeFlyWithMe.....I bet you make heaps for them with what they charge the people you use your card with ??? Just because YOU don't pay them interest does not make you an unprofitable customer.
Work it out, you might put $ 250/$300K through your card annually at about 1.5 % charge out for them = $ 4/5,000 from YOU using THEIR card.

It doesn't come out of my pocket so therefore IDGAF.

 

[Walter_Plinge]

So the premium cards make the from the HNW individuals who pump heaps through the card, whereas the lower value cards (like WOW) are trying to get people to carry a balance as their business model is predicated on the interest rates they charge.

That's a reasonable explanation why WOW burned points-chasing cardholders like me: putting tens of thousands of charges through each month but paying no interest. Not profitable for them. What they're now left with is interest-paying types: Kylie the process worker from Narre Warren who splurged a few thousand on a weeks-long overseas holiday.

 

[ComeFlyWithMe]

Sadly I think we all outclassed a card with supermarket branding long ago.

 

[burmans]

Sadly I think we all outclassed a card with supermarket branding long ago.

We never had these cards for the prestige, let's face it, an orange coloured "platinum" card! We were all only here for the points!!

 

[cove]

Have just hit 5 figures of points on my QCUCC and so far so good. The first million points will be the hardest is what I am thinking.
Have stopped using the WOWCC ever since I validated the Qantas Credit Union credit card.Have not cancelled it as the year has not finished.

 

[Aussie_flyer]

We never had these cards for the prestige, let's face it, an orange coloured "platinum" card! We were all only here for the points!!

I had the silver

 

[Moopere]

That's a reasonable explanation why WOW burned points-chasing cardholders like me: putting tens of thousands of charges through each month but paying no interest. Not profitable for them. What they're now left with is interest-paying types: Kylie the process worker from Narre Warren who splurged a few thousand on a weeks-long overseas holiday.

Mm, the thing is, whilst their model and therefore primary focus might be on those who carry a balance, they already know, and accept that perhaps 15% of their income will be from interchange fees (using above figures). There isn't a downside to this - its still money and its still flowing in the right direction (for them) - so, I still can't really understand why they would want to limit that income in any way, unless this particular card was part of a family of products and they preferred, for income reasons, to move certain types of customers to other more profitable products - but WoW doesn't have a stable of other finance products, so why do it?

 

[bismarck]

Mm, the thing is, whilst their model and therefore primary focus might be on those who carry a balance, they already know, and accept that perhaps 15% of their income will be from interchange fees (using above figures). There isn't a downside to this - its still money and its still flowing in the right direction (for them) - so, I still can't really understand why they would want to limit that income in any way, unless this particular card was part of a family of products and they preferred, for income reasons, to move certain types of customers to other more profitable products - but WoW doesn't have a stable of other finance products, so why do it?

But HSBC/Macquarie do.

WOW is just the brand being slapped on a white-labelled product.

Because the interchange fees on premium cards are higher, they're probably trying to shift you to a more premium card for which they will pull higher interchange fees.

 

[Moopere]

But HSBC/Macquarie do.

WOW is just the brand being slapped on a white-labelled product.

Because the interchange fees on premium cards are higher, they're probably trying to shift you to a more premium card for which they will pull higher interchange fees.

Certainly - but as the card is 'oem' if you like, there is absolutely no guarantee that customer will be interested or even _know_ about your other product - nor is there any incentive for them to stay within the stable. As opposed say to an Amex card, where you are clearly aware of the brand and can (perhaps) be swayed into other more profitable product by gentle nudging.

It just seems like a big business risk to me with no real upside. Yes, perhaps a few tenths of a percentile of those affected customers will move away from the MacWoW card and into another Macquarie card, but most will be lost to competitors. Why risk that 15% of interchange fee customers ... whats the actual upside?

 

[leyton01]

Did anyone get a 2,000 point activation offer which was then sweetened to 5,000 points or was it just one or the other?

 

[dede]

Did anyone get a 2,000 point activation offer which was then sweetened to 5,000 points or was it just one or the other?

I only received the 5,000 point offer.

 

[Cossie]

Haven't received any offers as yet, but I have been approved for a Qantas Credit Union card, so once that arrives and is set up with my direct debits, the woolies cards will be meeting a pair of scissors.

 

[ellen10]

I only go the 2000 point offer.
Have not activated it yet.

 

[get me outta here]

I have the new card but have not activated it. I received the 2000 K offer but so far i have gnored it till I get a 5K offer. I'm fee free on WOW for another year so there's no rush as I'm getting 1:1 on a fee free AMEX to Velocity.