Good BA credit cards launch in France and Italy – why aren’t fintech firms entering our broken market?

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New British Airways credit cards launched in France and Italy last week.  Whilst most of us won’t be able to apply for them, it is always worth keeping an eye on what benefits the airline is offering in other markets.

What is interesting is how aggressive these cards are, given that France and Italy have been impacted by the 0.3% interchange fee caps in the same way as card issuers in the UK.

Here is the French card.

There are two versions.  The basic card offers:

  • Annual fee of €24
  • 4,000 Avios on signing and a further 2,000 Avios after spending €2,000
  • 8 Avios per €10 on general purchases
  • Double Avios on BA, Aer Lingus, Iberia, LEVEL and Vueling spend
  • 10% discount on all British Airways flights

The Premium card offers:

  • Annual fee of €96
  • 8,000 Avios on signing and a further 2,000 Avios after spending €2,000
  • 10 Avios per €10 on general purchases
  • TRIPLE Avios on BA, Aer Lingus, Iberia, LEVEL and Vueling spend
  • 10% discount on all British Airways flights

This is an exceptionally generous earning rate for a Visa card compared to the UK Avios offerings.  The basic card offers the equivalent of 1 Avis per £1.12 spent.  The premium card offers the equivalent of 1 Avios per 89p spent.  This is excellent.

British Airways Italian credit card

Here is one of the Italian cards which are very similar.

There are, again, two versions.  The basic card offers:

  • Annual fee of €49
  • 4,000 Avios on signing
  • 1 Avios per €1 on general purchases
  • Double Avios on BA, Aer Lingus, Iberia, LEVEL and Vueling spend
  • 10% discount on all British Airways flights

The Premium card offers:

  • Annual fee of €95
  • 10,000 Avios on signing
  • 1 Avios per €1 on general purchases
  • TRIPLE Avios on BA, Aer Lingus, Iberia, LEVEL and Vueling spend
  • 10% discount on all British Airways flights

This is another excellent package although the earn rates are a bit odd.  Since you earn the same base rate of 1 Avios per €1 on the €49 and €95 cards, the only reason to get the Premium version is if you spend substantial amounts on IAG flights.

British Airways Italian credit card

Why aren’t we seeing such deals in the UK?

If you want to earn Avios from a UK Visa or Mastercard, your current options are all FAR worse than the deals aboveI run through the options in this HFP article.

Having spent some time recently with a very niche start-up UK credit card issuer, I am convinced that the UK credit card market has simply grown fat and lazy on the oversized profits available before the interchange fee caps came in.

I know that one travel group we follow asked five different UK card groups to pitch for its credit card contract.  Four of the companies approached refused to do so, and the contract was awarded to the only party who bothered to show up.

But where is the competition?  Venture capital investors have poured huge amounts of money into Monzo, Revolut, Starling etc ….. companies offering online current accounts, a sector which has never even made much money for incumbent banks.  Who is out there pumping money into start-up credit card companies, a sector which has always been very profitable?  The firm I met, which already has niche cards in issue, has just a handful of staff.  Their entire office takes up less space than the lobby of our WeWork building.

It is all very odd.  The only block to launching credit cards is the capital for your loan book, which lenders appear to be very nervous of providing to start-ups.  From my discussions this money is not easy to find because, unlike venture capital, it does not deliver equity-style returns to funders.  The BA Amex cards – which admittedly are far bigger than competing products – do £1bn per month of billings.  Finger in the air, I would estimate you would need a £3bn ‘float’ to run this card even though very few cardholders pay interest.

At the moment, we have the following companies who used to have, but have now dropped (at least for new applicants), UK airline and hotel credit cards:

  • Flybe
  • Ryanair
  • easyJet
  • United Airlines
  • American Airlines
  • Etihad Airways
  • Emirates
  • Hilton
  • Marriott

Who is going to come into the market to meet the demand which is clearly there?  It is quite clear, from what is happening in Europe, that the view that ‘0.3% interchange means you can’t make money’ is nonsense.

(Want to earn more miles and points from credit cards?  Click here to visit our dedicated airline and hotel travel credit cards page or use the ‘Credit Cards Update’ link in the menu bar at the top of the page.)

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Comments

  1. Got the card. I’ll probably ditch my Italian gold amex now that I have this one 🙂

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