A couple of years ago, Tesco upgraded some of its credit card holders to the Tesco World MasterCard. World MasterCard is a premium product which comes with some elite benefits along the lines of those offered by American Express – see the website.
Tesco even bribed people to accept the upgrade! They received some bonus Clubcard points, and the promise of a further 650 Clubcard points for every year they kept the card. If you upgraded your card, you should have received your 650 points for 2013 in the last week or so.
And yet, if you look at the Tesco website today, the Tesco World MasterCard is nowhere to be seen! (I couldn’t even find a picture of it, so I chose this instead:)
The story behind this decision is outlined at the Retail Insider blog. And a fascinating story it is, which shows another example of how Tesco has been operating like a headless chicken in recent years.
World MasterCards have higher fees to retailers than standard MasterCard products. This is presumably because retailers are told they are held by ‘premium’ customers who will spend more.
But where were Tesco World MasterCard holders doing a large percentage of their shopping? Well, erm, in Tesco. No big surprise there.
Tesco’s UK retail business started to take a big financial hit because of the extra card fees taken by MasterCard on the World product. Some of this increased fee went back into Tesco Bank as commission, but some did not. And in any event, it made the financial performance of the UK retail business look poorer than it was. With other parts of the Tesco empire struggling, the company was desperate that the UK arm continued to show good performance.
The Tesco World MasterCard was therefore withdrawn to new cardholders. It is ironic, though, that Tesco is still paying existing cardholders 650 Clubcard points every year for keeping it!