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Good British Airways credit cards launch in Europe – why aren’t fintech firms entering the UK?

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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.

There are two French 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.

The Italian cards 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.

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 above.  I 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.

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Comments (83)

This article is closed to new comments. Feel free to ask your question in the HfP forums.

  • Charlie T. says:
    10 Dec10 December 08:28

    Could it be that there is a greater proportion of HFP type hobbyists in the UK? I suspect that most of us generate minimal return for the card issuers, and there is a minority who have found ways to manufacture their way to being substantially loss making. Who would be interested in a “debt-like” return to enter the market knowing that you stand every chance of getting scalped?

    • Rob says:
      10 Dec10 December 08:45

      It is swings and roundabouts though. From scratch, how much do you reckon a start-up credit card company would apend in marketing costs to get to 100k cardholders? Or stick a Hilton logo on the front and let Hilton do all the marketing for you and get you to that number within a couple of months?

      Note that the Virgin Atlantic cards are virtually as generous as these BA cards and Virgin Money still thinks it can make money. It could be wrong, of course.

  • James says:
    10 Dec10 December 08:30

    On my Gold Amex which hits its anniversary in January, is it a no brainier to renew for my 10k points bonus then cancel for pro rata refund? Even if it’s 2 months of the fee?

    • Rob says:
      10 Dec10 December 08:42

      Yes, bonus is worth £100 and you get 2 more lounge passes if you are flying before you cancel.

  • Rune says:
    10 Dec10 December 08:41

    British Airways abandons the Swedish market for Visa credit card. The card will expire on February 4, 2019. After that, we can not earn any Avios on regular purchases. Very sad as there is no other card.

  • Rob says:
    10 Dec10 December 08:41

    But MBNA is a big bloated operation. Look at how few people Monzo, Atom etc employ compared to the big banks. I mean …. look at how few people HFP employs compared to what a similar print-based magazine would need.

  • xcalx says:
    10 Dec10 December 08:42

    This time 4 years ago.
    https://www.irishtimes.com/business/technology/safecharge-acquires-irish-tech-firm-3v-for-14-5m-1.2047510

    We all know what happened to 3V when we all sucked the life out of the cards by emptying the card balance in full.

  • Oh Matron! says:
    10 Dec10 December 08:43

    “Quite frankly, I don’t really want to bank with a company that’s run by a handful of people in offices that are hired by the hour.”

    This is the shape of things to come, and whilst a post box in a shared office is as seedy as hell, running a business from a WeWork or Spaces is now becoming perfectly legitimate.

    However, as you rightly say, I wouldn’t trust a finance company bing run from a shared workspace either

    • Rob says:
      10 Dec10 December 08:49

      Avios is now running out of WeWork Chancery Lane. Barclays is in our building. Skyscanner used to be here. Curve is in a shared workspace.

      How else is a start up meant to grow when landlords want a 25 year lease signing and you don’t even know how many staff you will have next month? WeWork is 30 day rolling contracts and you can take a bigger or smaller space each month as suits.

      One of the marketing groups we work with now has NO offices, apart from a couple of admin people in a tiny space. All staff work from home.

      • Mr(s) Entitled says:
        10 Dec10 December 09:02

        I suspect that the Barclays staff will be in a function that is very inconsequential. Or at least I hope they are, given the security risks.

        • Rob says:
          10 Dec10 December 09:05

          No, it is the tech guys. It is always the tech guys, because they consider themselves too cool to work in Canary Wharf (or Crawley for Avios) and the only way to get the sort of young people who want table tennis tables, free beer and pool tables in their office is to go to WeWork or similar.

      • David says:
        10 Dec10 December 19:20

        To be fair, I think the “too cool for Crawley” threshold is a low one…

    • RussellH says:
      10 Dec10 December 17:09

      > I wouldn’t trust a finance company bing run from a shared workspace either.

      1. Presumably the company would require to be authorised by the FCA or one of the other financial regulators?

      2. It is **credit** card operations we are talking about here. If they do go belly up, they do not owe me anything, apart from a few points, even in the worst scenario, surely.

      I would consider trying out one of the new firms banking too, if they permiited access from a proper computer with keyboard + mouse. Restricting access to a ‘device’ with a tiny screen and having to use a touch screen are the killers for me.

  • Nick Burch says:
    10 Dec10 December 09:28

    Assuming the 10% discount works as the BMI MBNA one did at the start (before it got extra generous on domestic flights just before the end…), it could be worth getting one of those cards for the discount alone if you do any long haul flying with BA

    Looks like the French card may require a French bank account: “Sans changer de banque – elle est liée à votre compte courant habituel” seems to imply it needs linking to one. I assume a French postal address is a must-have too.

    Has anyone been able to find out if the 10% voucher works for any BA flight, or just ones starting in France or Italy?

    • Neil says:
      10 Dec10 December 10:25

      I would imagine the discount would work like Vitality health insurance. i believe they offer some form of discount for being healthy but can’t speak from experience.

    • Shoestring says:
      10 Dec10 December 10:27

      Unfortunately their link to see card T&Cs is broken. It does talk about ‘vols’ ie plural and excludes First. So I’d imagine you can get 10% off every time.

      Sounds a bit like the BA discounts you get with Vitality insurance, which ISTR really can offer decent value and you’re not ripped off on having to buy higher price tickets than could be obtained elsewhere. Though the number or repeats is limited with Vitality.

    • Lady London says:
      10 Dec10 December 11:11

      Hum. Sounds like it’s a debit card to me. Other countries Visa cards often charge straight to the customer’s bank account, immediately.
      I’m not impressed by these offerings. However if I flew a lot on BA especially if work was charging my credit card via the corporate travel agent for my flights, and I was claiming them back, then I would be very interested indeed. BA would then get all my leisure spending too.

      I think what we have in the UK from Amex is better… Although I did see somthing last week that made me think perhaps Amex Germany is requiring a contribution from German cardholders for their Priority Pass?

      • Adam says:
        10 Dec10 December 11:32

        It is like a Debit Card with Credit capability. I believe you need to opt in to use the revolving payment functionality.

        • Dan says:
          10 Dec10 December 15:30

          Every time you use the card there is an extra step where it asks if you want to charge the transaction “au comptant”, which is charged to your bank at the end of the month just like a charge card (i.e. must be paid in full or else), or “au credit” which means you repay it over something like 2 years with obscene interest.

          Provided you only do the former it is very worthwhile given the dearth of alternatives in France (unless you want FlyingBlue miles via the Air France Amexs).

  • Lady London says:
    10 Dec10 December 11:17

    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

    • Mark2 says:
      10 Dec10 December 12:56

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

      • TM says:
        11 Dec11 December 20:58

        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

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