EU credit card fee caps – BA slashes card benefits in Sweden, closes Germany

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• Idrive says:

  17 Oct17 October 05:55

  I like to think that for each opportunity that goes a new one arises!
  Goodmorning All! I was going to miss my flight this morning but now off to T5 Aspire for breakfast i am still in time and starving!;-) lucky me! You see Raffles helping us to fly more means we are more likely to miss one flight out of a few;-)

  I am sorry for our fellows in Germany but i believe also the number of applicants has probably be low over time due to the Lufthansa presence(M&M card). Spending that amount in Sweden is outrageous instead!!

  • Polly says:

    17 Oct17 October 06:53

    I drive, please report! How is aspire then this morning? Will be using it next month to DUB while doing my final two BA sectors for silver, finally! So, how is it in there? Tnx

    • Idrive says:

      17 Oct17 October 19:26

      Hi Polly i am sorry but in the end i went to Galleries i found myself being called by name from behind at security /i ran into a friend flying to Nice so i went with her to the Galleries! But i may fly again from T5 shortly in that case i will!

• RK says:

  17 Oct17 October 06:10

  Kind of torn on this. On one hand, selfishly, I love the free perks, signup bonuses you get from these cards, on the other hand, I do agree that card fees should be lower as this will lead to more widespread adoption – good for consumer – and is fairer for businesses..

  I suspect card companies give the signup bonus partly to encourage people to borrow money, so they can make money on interest. A lot of us probably pay our full balance every month but hopefully there are enough people who don’t to still make the signup bonuses worthwhile to offer.

  • Frenske says:

    17 Oct17 October 06:50

    If this means that prices will come down a little bit (on average), it is good for the general public. It puts money in our pocket or businesses instead of the CC companies.

    Not so good for us since we get more out of these cards than the general public.

    • Guesswho2000 says:

      17 Oct17 October 07:31

      Will they? Or will retailers pocket the difference? I suspect the latter, but I may be mistaken.

      • Sebastian says:

        17 Oct17 October 08:02

        I fully agree. Due to the fee card companies were charging, I don’t see how we as the consumer will see the benefit, the companies will just keep it as when this comes in. To be honest, I understand why the debit card fees got reduced but I think the credit card ones should have remained, then companies could’ve made a choice like they do with Amex.

        • Rob says:

          17 Oct17 October 10:28

          That’s not how it works in reality. There is no direct correlation between falling card fees and falling prices, but – logically – falling overheads create an opportunity for price reductions (or higher wages, or higher profits, depending on the price sensitivity of the business).

          Supermarkets may well pass it on. Someone like, say, Ryman or WH Smith – which compete on convenience and not price – will not because their customers are not price sensitive.

        • Joe says:

          17 Oct17 October 10:45

          We’re talking of a reduction of about 0.6% most of the time. Most things I see in the supermarket are priced to a sensible price point. I don’t see Tesco charging £9.97 instead of a tenner when they are doing these “3 for £10” deals.

          I don’t even think there is any suggestion that the price drop will be passed on to consumers. The only thing I can hope for is more clubcard/nectar benefits as, per £1 spent, they’ve now got slightly more to play with.

        • Talay says:

          17 Oct17 October 19:09

          Actually, debit card fees have risen dramatically from a circa 8p or so flat rate to a percentage charge, which is capped at 50p to the intermediary but which few acquiring banks are capping for their clients.

          Thus, selling a £1000 item last year could cost you 8p in charges, it might now cost you £8 (0.8%).

          As to credit card reductions, then yes, they have come down but not on “World” cards, such as the Marriott Mastercard, but the credit card business is a funding game and I suspect this will see a rise in interest rates as fees come down.

    • RIccati says:

      17 Oct17 October 09:51

      You won’t see a penny of it, Frenske.

      But even in an ideal world where price decrease will be passed through exactly, the benefit of having 20p off your supermarket purchase is nowhere comparable with the added value created by a miles/points credit card scheme.

      A credit card scheme is is a more complex product. While it looks that interest-payers and businesses pay for it, they behave like economic agents making their choices, e.g., they accept more expensive Amex if they wan’t more customers (and Amex customers spend more). The product gives a way for economic agents to express more complex behaviour.

  • RIccati says:

    17 Oct17 October 09:43

    While the capped fees are “good for consumer” and “good for business” form the viewpoint of the social planner, you won’t see a penny of that.

    It’s hard to trace the large stores/supermarkets but tell about fee cap to your local business (e.g., drycleaners) and ask for a discount on that basis. Report back.

    We’ll also observe if BA stops charging £4.50 on Visa/Mastercard credit cards or reduces it to £2-3. (They argue that fee is an average of their card processing costs, so with the cap that average expense per customer must surely go down).

  • Joe says:

    17 Oct17 October 10:24

    interest still makes up the lion’s share of income for credit card companies. However as you say, I wonder if this is the case for these rewards cards.

    The attack on the interchange made is not only coming from the EU rules, but also the way that the market is evolving. Payment via mobile phones (Apple Pay, whatever Android equivalent we get, and similar things) will also take a lot of the interchange income away from the credit card issuer.

    Unquestionably, those who earn a lot of their air miles/hotel points from credit card spend will be badly affected over the next year or so. The only hope is that BA and other airlines find another way for us to get our hands on cheap avios, to replace those that will no longer be sold through credit cards.

• Danksy says:

  17 Oct17 October 07:33

  I expect the first casualty to be barclaycards Hilton card!

  • Tariq says:

    17 Oct17 October 08:01

    I can’t see the historic MBNA Diamond Club (ex BMI) Mastercard lasting long either…

    • flyforfun says:

      17 Oct17 October 10:06

      Nooo!!!!!!!

      That is all.

      • Londonbus says:

        18 Oct18 October 12:58

        Diamond Club has been on life support since 2012. I imagine it will close when the pre-purchase destination miles have been exhausted – or the contract has expired. Enjoy it while you can

• James67 says:

  17 Oct17 October 08:09

  It is potentially a bigger problem for me than devaluation was because churning amex cards is my main source o avios , especially since the daft tesco clubcard promotions seem to have dried up. From summer next year it looks like my mix will be a minimum 50% cheap revenue fares and tge rest avios. We reay need a hit on the Scottish APD now to keep things moving in right direction but that looks like it might not happen until 2017. So much for the timetable on delivering the devolved powers.

  • Dan says:

    17 Oct17 October 09:07

    How you managed to bring Scottish APD into a discussion about credit card fees I have no clue! In a parallel world somewhere, there is a Scotland that has left the UK and is realising things might not be so great now that the price of oil has plummeted… and still subjected to EU rules on credit card fees….

    • James67 says:

      17 Oct17 October 10:30

      LOL, all I meant was that if capped fees have a knock-on effect on amex I will likely have much less avios so I become more reliant on revenue fares therefore reduction of APD in Scotland with repercussions elsewhere has to be beneficial for me and others across the UK. My point about delicery of powers was just that it is taking longer for APD changes to occur than most expected. I am not, and will refrain from making any political comment.

      • Erico1875 says:

        17 Oct17 October 18:19

        I don’t really know what the top guys in Tesco are thinking.
        It was Club Card that turned Tesco into the UKs biggest retailer.
        Cant they see that by devaluing Club Card they will lose customers? .

        • Callum says:

          18 Oct18 October 02:40

          Can’t they also see if they halved all their prices they’d get more customers…..

          Clubcard getting them more customers is irrelevant if the club card cost is more than the increased profit. And while I haven’t looked at it recently, I’m fairly certain the figures show that most transactions don’t even use a clubcard and every survey shows most people see these schemes as gimmicky and would prefer lower prices instead.

    • Sussex Bantam says:

      17 Oct17 October 11:04

      I’m guessing that if (when ?) Scotland votes for independence credit card fees will be quite low on their list of concerns….

• Andy says:

  17 Oct17 October 11:11

  Will this have an impact on retailers outlets accepting Amex. Already found a bar at Canary Wharf that has acepted amex but no longer accepts amex.

  • Rob says:

    17 Oct17 October 11:34

    Likely, if Amex does not cut fees. A difference of over 1 per cent is chunky.

  • Ludicrous says:

    17 Oct17 October 15:28

    An independent restaurant I worked for stopped taking Amex not for the high fees, but for how long they took to actually pay the restaurant the money.

    Which was a shame, as it was a good way for me to get extra points by being a little bit naughty (taking the cash from a cash payment and running my own card)

• czechoslovakia says:

  17 Oct17 October 14:23

  Hmmm. As far as i`m concerned, nobody wins with this change in the amount charged by VISA/MasterCard. Shops are going to pocket the difference, for sure, just as was when VAT was lowered. Whilst the card pushers surely make most of their cash from peoples interest payments, they`re still going to take a massive hit and sponsorship of events will suffer. Promotions will suffer. Benefits slashed. Or interest rates will go up? Wouldn`t like to be in AMEX`s position. As a business owner i choose not to accept AMEX. Will i be lowering my prices because of a few tenths of a percent saving on the others, no. What i predict is a lot more firms charging for AMEX transactions (like PayPal), if, they choose to offer it. And that`s bad for AMEX. I to date have never paid more just to pay via AMEX. Although my corporation tax bill would generate a few nice avios……

  • czechoslovakia says:

    17 Oct17 October 14:27

    One last comment, before i get off my horse… The EU should be solving more important things anyway. Visa and Mastercard should be allowed to charge what they want – if its too much, people will go elsewhere. So much for the open economy……….

  • Nick says:

    17 Oct17 October 14:28

    Well, the shops win. That’s the point – it is they who are kicking up the fuss!

  • Callum says:

    18 Oct18 October 02:42

    While I generally agree – many shops did pass on the VAT cut, including some (all?) Of the big supermarket chains.

• pointscollector says:

  17 Oct17 October 18:27

  In Germany, earnings on the LH cards will also be halved to a rate of 2 euros = 1 mile as of 1 Jan (unless you have a “corporate” mastercard, in which cards you will still earn 1 mile per 1 euro spent). Interestingly though, I am no longer charged a FX fee on purchases in other European currencies (no longer paying for transactions in GBP, Swedish Krona, Norwegian Krona, etc.), which respresents a massive saving for me. Though I am wondering if this is also due to an EU directive or whether this is the bank trying to make more appealing the massively devalued earnings on the LH credit card. Do you think the UK BA Amex or the Lloyds Avios Amex will be affected by this?

  • Rob says:

    17 Oct17 October 19:21

    Amex-issued Amex cards will NEVER be impacted (except that competitive pressure will force down fees).

    Amex cards issued by other banks ARE impacted but for some weird reason get a 3 year grace period so are not impacted until 2019. You then have the odd scenario where interchange rates will differ depending on who issued the Amex card a customer uses.

• Jim Quinn says:

  17 Oct17 October 19:26

  Will this also impact on Supercard?

  • Rob says:

    17 Oct17 October 20:12

    You would imagine that this was built into the Supercard business model, given that these plans have been coming down the track for a while.

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