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. Lady London says:

    By the way Rob, if you’re talking about the revenue-takers in the UK consumer finance market having got “fat and lazy” I agree. Even more iniquitous is the standard 3% FX charge that seems to have become market practice in the UK.

    When interest rates were less than 1%, and remember interest rates are the base amount you can take loans out at (the actual interest rate you will pay being adjusted upwards from the base rate according to how the lender judges the risk of the loan not being paid back)…. how on earth can simple flat rate, charged immediately at the time of the FX transaction, no risk (because FX transaction is completed immediately) fee for FX be 3%? When theoretically money could be borrowed for 1 year by a not perfect customer, also for 3%???!!!!!!

    Come to think of it FX fees of 3% that are still charged for any non-risk FX transaction in the UK, are the only thing I can think of that are worse than British Airways’s “carrier greed” charges when you use the avios you have earned for a ticket!! if long haul

    Rant over

    • Or is it the cardholders who are lazy by paying 3% when they could get it free.

      • I just find it annoying I had to apply for another card, particularly if you have spend targets to meet. I used to use the Clarity, now my Curve does the job

  2. Oliver Anderson says:

    Anyone seen the revenue requirements for the French cards? I have a French bank account and live in France but get a small salary. I clicked through the link and started the application and can see ‘justicatif de salaire’ so they want proof of income. I’ve got wage slips and tax return (which they ask for) but would like to know what salary is needed for either of the classic and premium cards.

  3. I can apply…. 🙂
    Rob, do you know how the discount works?

  4. OT: Virgin Atlantic

    I want to fly with the Mrs to NYC for her birthday. I’ve collected enough Virgin points for us to go Upper both ways, but I don’t know what plane/route to fly on.

    Options see to be:
    Virgin Atlantic Airbus
    – A340-600
    – A330-300
    – 787-9
    Delta
    – A330-200

    Which aircraft is likely to have the best Upper experience?
    Is there a difference in experience between a Virgin vs. Delta flight/crew?

    Thanks
    Mike

    • Re flying to New York – if you want to fly Upper then choose Virgin and the 787 or second choice A330. Delta One is very different to Upper – and you won’t have an ‘Upper’ experience on a Delta flight. You’ll have a Delta One experience. For both you will get access to the Club Lounge though.
      Regarding the crew – Virgin will always top trump Delta. I’ve rarely had a bad Virgin crew – always young, friendly, lots of smiles – in all cabins. Delta crew – invariably much older and the women all called Nancy. Not as good.

      • Thanks The Don. So it’s fair to say that the Delta One experience is less impressive than the Virgin Upper experience?

        • Hi Mike
          If you’ve never flown Upper I would try this first without question. If you want to sit with your partner (if this is important!) the Delta One seats allow this if you manage to get the centre aisle pair as they kind of face in to each other. None of the herringbone Virgin Upper seats are couple friendly in my opinion – but you do also have the on-board ‘bar’. So you could sit at two of the three seats at the bar (I think there is three?) – again Delta One don’t have this. I’ve done both and would do Upper if I were you.

  5. Why is one €96 and the other €95. Where is the logic behind that? I can understand €8 per month thing.

  6. Good afternoon everyone

    I hope you are all well.

    Just wanted to help to clarify what the 10% Italian BA card discount means.

    Looking into this in more detail, it is applied on the total final price, inc any additional charges.

    The discount is applicable on all flights and tickets solely operated and sold by BA, with the exception of First Class.

    You can ONLY use the discount for flights that originate FROM Italy to London and if applicable beyond

    Plus the discount on the ticket, can ONLY be applied to the person flying, that actually holds the credit card and no one else.

    You can find it all of this at the bottom of the below page link, under Part. 8 of “Termini e condizioni” (Terms and Conditions).

    https://www.britishairways.com/it-it/executive-club/collecting-avios/credit-cards/italy

    Kind regards to everyone

    Ronster

  7. “I am convinced that the UK credit card market has simply grown fat and lazy on the oversized” – Amex UK being a good example of that.

  8. In another galaxy, the swedish BA card will be history shortly https://www.headforpoints.com/2015/10/17/eu-credit-card-fee-caps-ba-slashes-card-benefits-in-sweden/ No wonder since Lufthansa’s and SAS’ cards are a lot better. (SAS has also status earning cards)

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

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