John Lewis Partnership Card

lr1277

The following is speculation based on reading this forum and the Head for Points forum.

Many people have commented on the John Lewis customer base. But the financial landscape has changed since 2004 when the Partnership card was launched.
Since the EU interchange fees are lower, card companies can't make as much money as they used to from each transaction and/or customer. Especially if the card company gives out rewards (vouchers in this case).

So the way card companies are now looking to make money is through customers paying interest for late payments and/or a monthy fee.

The relatively new Barclays Avios card has (or had) a hefty Avios joining bonus plus a best in class earnings rate on Avios points i.e. one Avios point per pound spend. Not like the partnership card of either 5 or 1 point for each £4 spend.
Beacause of the Avios rewards, it is said, Barclays loses money on each transaction. So Barclays were picky in terms of whom they gave a card.
There are many examples of people with outstanding credit histories who paid their bill in full being denied the card. So the argument was that Barclays would only take customers where either:
1) they could make money by charging interest for late payments
2) they could cross-sell other Barclays products. So some existing Barclays Premier account holders were rejected despite their income and outsanding credit histories.

So there is a possibility that Newday is the chosen provider because their lending standards are looser than HSBC so there is a chance to make money from interest charges. They may also introduce a monthly fee. This will allow JL to keep giving out vouchers to their loyal customers. Which could be how JL want to keep their customers on side.
Or speculating again here. they could take the Barclays route. One card without a monthly fee with a lower points earning rate and a 2nd card with a monthly fee and a higher points earning rate.

To be fair. Newday partnered with Amazon and their co-branded card does not have a fee and allows you to earn points from Amazon. But I don't know the earnings rate nor spending ability.

Edited to add: I just looked at the Amazon credit card page and they are not accepting new applications at the moment. Also I tried to work out the spending requirements to get a £10 Amazon voucher but I couldn't do it. Too complicated for me.

2nd edit: Forgot to mention the other way card companies make money is to charge for balance transfers. Which again, it seems Barclays were looking for customers who carried balances on other companies' cards.

3rd edit: Of course Barclays took some customers with high incomes who paid their bills in full. Some of them even had Barclays Premier accounts. The algorithm granting the card was set by Barclays based on their requirements.

WillPS

lr1277 said:

The following is speculation based on reading this forum and the Head for Points forum.

Many people have commented on the John Lewis customer base. But the financial landscape has changed since 2004 when the Partnership card was launched.
Since the EU interchange fees are lower, card companies can't make as much money as they used to from each transaction and/or customer. Especially if the card company gives out rewards (vouchers in this case).

The card had already been adjusted to accommodate the interchange fee cap - the 'everywhere else' rate dropped to effectively 0.25% which is pretty much the default for these style of cards now, and is presumably about break even on interchange.

lr1277 said:

So the way card companies are now looking to make money is through customers paying interest for late payments and/or a monthy fee.

That's not quite true. There are other revenue streams open - one imagine JL pay a considerable commission on in-JL/Waitrose spend; enough to justify the 1.25% customer offer but also provide a profit opportunity for the issuer. Similarly many providers (including Barclaycard although not yet on the Avios cards they offer) are pushing their 'on card' cashback portals which one must imagine is a lucrative source of income for them.

lr1277 said:

The relatively new Barclays Avios card has (or had) a hefty Avios joining bonus plus a best in class earnings rate on Avios points i.e. one Avios point per pound spend. Not like the partnership card of either 5 or 1 point for each £4 spend.
Beacause of the Avios rewards, it is said, Barclays loses money on each transaction. So Barclays were picky in terms of whom they gave a card.
There are many examples of people with outstanding credit histories who paid their bill in full being denied the card. So the argument was that Barclays would only take customers where either:
1) they could make money by charging interest for late payments
2) they could cross-sell other Barclays products. So some existing Barclays Premier account holders were rejected despite their income and outsanding credit histories.

Barclaycard do indeed seem to be doing something a bit unconventional with their Avios product. Of course we don't know how much they are paying for Avios, but it does seem likely they are making a loss on interchange and hoping to recoup that elsewhere. It's far from a trend however, and crossselling is not really something NewDay could really do since their offerings are mostly whitelabel/co-branded.

lr1277 said:

So there is a possibility that Newday is the chosen provider because their lending standards are looser than HSBC so there is a chance to make money from interest charges. They may also introduce a monthly fee. This will allow JL to keep giving out vouchers to their loyal customers. Which could be how JL want to keep their customers on side.
Or speculating again here. they could take the Barclays route. One card without a monthly fee with a lower points earning rate and a 2nd card with a monthly fee and a higher points earning rate.

To be fair. Newday partnered with Amazon and their co-branded card does not have a fee and allows you to earn points from Amazon. But I don't know the earnings rate nor spending ability.

Edited to add: I just looked at the Amazon credit card page and they are not accepting new applications at the moment. Also I tried to work out the spending requirements to get a £10 Amazon voucher but I couldn't do it. Too complicated for me.

2nd edit: Forgot to mention the other way card companies make money is to charge for balance transfers. Which again, it seems Barclays were looking for customers who carried balances on other companies' cards.

3rd edit: Of course Barclays took some customers with high incomes who paid their bills in full. Some of them even had Barclays Premier accounts. The algorithm granting the card was set by Barclays based on their requirements.

Every indication is that the rewards will be similar or the same. Expectation management wise one would expect changes like this to be spelled out as far as possible in advance. I very much doubt a monthly fee will be introduced unless they come up with an enhanced/premium tier, as this would be a blocker to many considering signing up for the new credit card. This doesn't seem to be how NewDay typically do business. The Amazon NewDay card had no minimum spend for payment of its sign up bonus - it literally immediately posted to your Amazon.co.uk account after approval. The card will be losing its Amazon branding next year, possibly to make way for a branded offering from Amex (who already do the Amazon Business credit cards).

Marchitiello

WillPS said:

artyboy said:

WillPS said:

artyboy said:

Just spotted this thread. Mrs Arty has a JL card and it's been a pretty miserable experience - from the point of a very elongated application process where she was asked to prove her income; to being given a limit much lower than any other CC she's ever applied for; to extremely incompetent and borderline unintelligible customer service agents...

And now this, where even a handover of the client book can't be managed seamlessly. Well that's it... being able to use it (and earn cashback) in their bureau de change was a nice perk, but it's no great loss when it goes for us.

What we found surprising was that JL allowed HSBC to provide such poor service in their name. But then it's pretty par for the course with that bank...

Everything you've described is reportedly the reason why JL pulled the plug on the partnership - slow applications and tight lending criteria in particular.

The book isn't JL's so they can't force JLFS (which is a subsidiary of HSBC) to do anything with it.

What's happening is more like what happened with Asda where their existing card closed and a completely new one opened - the difference being that JL aren't leaving a gap between the old closing and the new appearing, which is leading to confusion over why nothing is being transferred.

I know it's not JL's book, but if they really have no control then it shows either naivity or poor management on their part.

HSBC/JLFS controls the risk and methodology for customer acceptance, but JL should have understood that up front and ensured it was aligned the the demographic of their intended client base. Likewise they should have agreed upfront service standards with penalties for not meeting them, including the option to move the book in a way that made the risk transparent for a new provider to assess.

Given we know HSBC has some of the most stringent lending criteria around, coupled with the typical customer demographic (ie JL/Waitrose shoppers), it's hard to understand why there aren't other providers queuing up to take what must be a pretty prime book. Unless HSBC is being obstructive in providing information about it...

(this isn't a subject area I'm totally unfamiliar with, by the way...!)

Can you cite an example of when a co-branded credit card product has been moved from one issuer to another and the book has been transferred with it?

The normal thing to happen is the losing provider simply keeps the book but drops the co-branding. Normally this is done a while before the new card becomes available - sometimes they overlap a little (as was the case with IHG when they moved from Barclaycard to Creation and Virgin Atlantic when they moved from MBNA to Virgin Money, from memory both had an overlap of 6 months-a year). 

I don't know for certain, but it seems rather like ownership of the book is something co-brand partners quite deliberately have nothing to do with.

The JLFS situation is notable in that there is a very short period of overlap with the new JL/NewDay and that HSBC is just shuttering the whole operation rather than trying to do anything with the (relatively prime) book.

This is the more accurate response albeit for what other have said (HSBC will be in touch) I am not sure they will close down the operation all together.

Santander for example retained the customers when they exited the store card market.

however what is different with HSBC is that they have effectively created subdivision to operate this type of cards (both JLP and M&S) which is a bit more complicated then just have a co-branded card.

Cobranded cards normally results in standard cards being issued when the Co branding agreements end, and that is how I found myself with 4 MBNA cards at one point.

WillPS

Marchitiello said:

WillPS said:

artyboy said:

WillPS said:

artyboy said:

Just spotted this thread. Mrs Arty has a JL card and it's been a pretty miserable experience - from the point of a very elongated application process where she was asked to prove her income; to being given a limit much lower than any other CC she's ever applied for; to extremely incompetent and borderline unintelligible customer service agents...

And now this, where even a handover of the client book can't be managed seamlessly. Well that's it... being able to use it (and earn cashback) in their bureau de change was a nice perk, but it's no great loss when it goes for us.

What we found surprising was that JL allowed HSBC to provide such poor service in their name. But then it's pretty par for the course with that bank...

Everything you've described is reportedly the reason why JL pulled the plug on the partnership - slow applications and tight lending criteria in particular.

The book isn't JL's so they can't force JLFS (which is a subsidiary of HSBC) to do anything with it.

What's happening is more like what happened with Asda where their existing card closed and a completely new one opened - the difference being that JL aren't leaving a gap between the old closing and the new appearing, which is leading to confusion over why nothing is being transferred.

I know it's not JL's book, but if they really have no control then it shows either naivity or poor management on their part.

HSBC/JLFS controls the risk and methodology for customer acceptance, but JL should have understood that up front and ensured it was aligned the the demographic of their intended client base. Likewise they should have agreed upfront service standards with penalties for not meeting them, including the option to move the book in a way that made the risk transparent for a new provider to assess.

Given we know HSBC has some of the most stringent lending criteria around, coupled with the typical customer demographic (ie JL/Waitrose shoppers), it's hard to understand why there aren't other providers queuing up to take what must be a pretty prime book. Unless HSBC is being obstructive in providing information about it...

(this isn't a subject area I'm totally unfamiliar with, by the way...!)

Can you cite an example of when a co-branded credit card product has been moved from one issuer to another and the book has been transferred with it?

The normal thing to happen is the losing provider simply keeps the book but drops the co-branding. Normally this is done a while before the new card becomes available - sometimes they overlap a little (as was the case with IHG when they moved from Barclaycard to Creation and Virgin Atlantic when they moved from MBNA to Virgin Money, from memory both had an overlap of 6 months-a year). 

I don't know for certain, but it seems rather like ownership of the book is something co-brand partners quite deliberately have nothing to do with.

The JLFS situation is notable in that there is a very short period of overlap with the new JL/NewDay and that HSBC is just shuttering the whole operation rather than trying to do anything with the (relatively prime) book.

however what is different with HSBC is that they have effectively created subdivision to operate this type of cards (both JLP and M&S) which is a bit more complicated then just have a co-branded card.

I agree that is a small difference, however far from insurmountable - HSBC could simply sell themselves the JLFS customers and transfer the book if it was worth doing. It just adds to the picture that ultimately HSBC wasn't making very much money from this operation.

artyboy

WillPS said:

Marchitiello said:

WillPS said:

artyboy said:

WillPS said:

artyboy said:

Just spotted this thread. Mrs Arty has a JL card and it's been a pretty miserable experience - from the point of a very elongated application process where she was asked to prove her income; to being given a limit much lower than any other CC she's ever applied for; to extremely incompetent and borderline unintelligible customer service agents...

And now this, where even a handover of the client book can't be managed seamlessly. Well that's it... being able to use it (and earn cashback) in their bureau de change was a nice perk, but it's no great loss when it goes for us.

What we found surprising was that JL allowed HSBC to provide such poor service in their name. But then it's pretty par for the course with that bank...

Everything you've described is reportedly the reason why JL pulled the plug on the partnership - slow applications and tight lending criteria in particular.

The book isn't JL's so they can't force JLFS (which is a subsidiary of HSBC) to do anything with it.

What's happening is more like what happened with Asda where their existing card closed and a completely new one opened - the difference being that JL aren't leaving a gap between the old closing and the new appearing, which is leading to confusion over why nothing is being transferred.

I know it's not JL's book, but if they really have no control then it shows either naivity or poor management on their part.

HSBC/JLFS controls the risk and methodology for customer acceptance, but JL should have understood that up front and ensured it was aligned the the demographic of their intended client base. Likewise they should have agreed upfront service standards with penalties for not meeting them, including the option to move the book in a way that made the risk transparent for a new provider to assess.

Given we know HSBC has some of the most stringent lending criteria around, coupled with the typical customer demographic (ie JL/Waitrose shoppers), it's hard to understand why there aren't other providers queuing up to take what must be a pretty prime book. Unless HSBC is being obstructive in providing information about it...

(this isn't a subject area I'm totally unfamiliar with, by the way...!)

Can you cite an example of when a co-branded credit card product has been moved from one issuer to another and the book has been transferred with it?

The normal thing to happen is the losing provider simply keeps the book but drops the co-branding. Normally this is done a while before the new card becomes available - sometimes they overlap a little (as was the case with IHG when they moved from Barclaycard to Creation and Virgin Atlantic when they moved from MBNA to Virgin Money, from memory both had an overlap of 6 months-a year). 

I don't know for certain, but it seems rather like ownership of the book is something co-brand partners quite deliberately have nothing to do with.

The JLFS situation is notable in that there is a very short period of overlap with the new JL/NewDay and that HSBC is just shuttering the whole operation rather than trying to do anything with the (relatively prime) book.

however what is different with HSBC is that they have effectively created subdivision to operate this type of cards (both JLP and M&S) which is a bit more complicated then just have a co-branded card.

I agree that is a small difference, however far from insurmountable - HSBC could simply sell themselves the JLFS customers and transfer the book if it was worth doing. It just adds to the picture that ultimately HSBC wasn't making very much money from this operation.

To the earlier question posed at me - I should probably clarify that whilst I am familiar with various client/risk books moving from one institution to another, that's not in the CC space - so if there really no examples of that ever having happened before then so be it - it just struck me that a prime book would have considerable interest, and so the only logical reason for it not being a seamless transfer was that HSBC was being obstructive over what the book/risk actually looked like. And if that was the case, I'd be laying the blame for that at JLs door for not having previously agreed a good process for 'transfer of business' with HSBC.

Interesting discussion about the changing landscape though, interchange fees etc - I had assumed that JL themselves subsidised the rewards on this card, especially as 1.25% on spend in their stores obviously didn't cost them that - once margins were taken into account?

I guess though if the book just isn't attractive though, maybe this isn't all HSBCs fault. Even if the current abysmal service level is!

Marchitiello

artyboy said:

WillPS said:

Marchitiello said:

WillPS said:

artyboy said:

WillPS said:

artyboy said:

Just spotted this thread. Mrs Arty has a JL card and it's been a pretty miserable experience - from the point of a very elongated application process where she was asked to prove her income; to being given a limit much lower than any other CC she's ever applied for; to extremely incompetent and borderline unintelligible customer service agents...

And now this, where even a handover of the client book can't be managed seamlessly. Well that's it... being able to use it (and earn cashback) in their bureau de change was a nice perk, but it's no great loss when it goes for us.

What we found surprising was that JL allowed HSBC to provide such poor service in their name. But then it's pretty par for the course with that bank...

Everything you've described is reportedly the reason why JL pulled the plug on the partnership - slow applications and tight lending criteria in particular.

The book isn't JL's so they can't force JLFS (which is a subsidiary of HSBC) to do anything with it.

What's happening is more like what happened with Asda where their existing card closed and a completely new one opened - the difference being that JL aren't leaving a gap between the old closing and the new appearing, which is leading to confusion over why nothing is being transferred.

I know it's not JL's book, but if they really have no control then it shows either naivity or poor management on their part.

HSBC/JLFS controls the risk and methodology for customer acceptance, but JL should have understood that up front and ensured it was aligned the the demographic of their intended client base. Likewise they should have agreed upfront service standards with penalties for not meeting them, including the option to move the book in a way that made the risk transparent for a new provider to assess.

Given we know HSBC has some of the most stringent lending criteria around, coupled with the typical customer demographic (ie JL/Waitrose shoppers), it's hard to understand why there aren't other providers queuing up to take what must be a pretty prime book. Unless HSBC is being obstructive in providing information about it...

(this isn't a subject area I'm totally unfamiliar with, by the way...!)

Can you cite an example of when a co-branded credit card product has been moved from one issuer to another and the book has been transferred with it?

The normal thing to happen is the losing provider simply keeps the book but drops the co-branding. Normally this is done a while before the new card becomes available - sometimes they overlap a little (as was the case with IHG when they moved from Barclaycard to Creation and Virgin Atlantic when they moved from MBNA to Virgin Money, from memory both had an overlap of 6 months-a year). 

I don't know for certain, but it seems rather like ownership of the book is something co-brand partners quite deliberately have nothing to do with.

The JLFS situation is notable in that there is a very short period of overlap with the new JL/NewDay and that HSBC is just shuttering the whole operation rather than trying to do anything with the (relatively prime) book.

however what is different with HSBC is that they have effectively created subdivision to operate this type of cards (both JLP and M&S) which is a bit more complicated then just have a co-branded card.

I agree that is a small difference, however far from insurmountable - HSBC could simply sell themselves the JLFS customers and transfer the book if it was worth doing. It just adds to the picture that ultimately HSBC wasn't making very much money from this operation.

To the earlier question posed at me - I should probably clarify that whilst I am familiar with various client/risk books moving from one institution to another, that's not in the CC space - so if there really no examples of that ever having happened before then so be it - it just struck me that a prime book would have considerable interest, and so the only logical reason for it not being a seamless transfer was that HSBC was being obstructive over what the book/risk actually looked like. And if that was the case, I'd be laying the blame for that at JLs door for not having previously agreed a good process for 'transfer of business' with HSBC.

Interesting discussion about the changing landscape though, interchange fees etc - I had assumed that JL themselves subsidised the rewards on this card, especially as 1.25% on spend in their stores obviously didn't cost them that - once margins were taken into account?

I guess though if the book just isn't attractive though, maybe this isn't all HSBCs fault. Even if the current abysmal service level is!

In Simple terms the financial institution, with the license allowing them to issue Credit Cards etc, always ultimately own the financial risks and thus the customer portfolio. The Co-branding agreement is simply a marketing agreement where the brand (in this case JL) sell access to their customer portfolio / allow to exploit brand fidelity in exchange of some financial return which is partially traded off by the rewards the brand itself offer.

Again, very simply, what happens when such agreement finish is that The brand (in this case JL) can contact the CC customer (such list sharing is part of the agreement in all the cases)  offering them a new co branded card, but as they never had any part in the actual financial/credit agreement between the old financial institution and the customer, they can only ask customer to apply for the new product.

the new player is “paying” the brand for acquiring the customer list, which is clearly cheaper then buying the Accounts Book, and can together with the brand, target with relevant marketing that list and apply their own criteria in approving customers from said list.

there would be no incentive for any new player to acquire the account portfolio from the previous financial institution and that is why it has never happened before.

Also, such agreements are always very clear that the financial institution owns the accounts (so ko blaming on JL as per your post)  for the reasons I explained above and thus at the end of the agreement  normally retain the customers  portfolio issuing them with standard cards.

the example of ASDA /Creation made earlier in the thread is very different as All evidence points to Creation exiting the UK credit card market all together and are simply trying to close account down (even earlier then the end of the Co-branding agreement as it is happening with the IHG cards and the numerous cases being brought to litigation). 

swabaxter

The days of the credit card are numbered. The best facility is that from one of the new Smart phone app based banks which provide excellent service and great flexibility. Use Apple Pay and not only do you have great convenience but security is state of the art too.

WillPS

artyboy said:

WillPS said:

Marchitiello said:

WillPS said:

artyboy said:

WillPS said:

artyboy said:

Just spotted this thread. Mrs Arty has a JL card and it's been a pretty miserable experience - from the point of a very elongated application process where she was asked to prove her income; to being given a limit much lower than any other CC she's ever applied for; to extremely incompetent and borderline unintelligible customer service agents...

And now this, where even a handover of the client book can't be managed seamlessly. Well that's it... being able to use it (and earn cashback) in their bureau de change was a nice perk, but it's no great loss when it goes for us.

What we found surprising was that JL allowed HSBC to provide such poor service in their name. But then it's pretty par for the course with that bank...

Everything you've described is reportedly the reason why JL pulled the plug on the partnership - slow applications and tight lending criteria in particular.

The book isn't JL's so they can't force JLFS (which is a subsidiary of HSBC) to do anything with it.

What's happening is more like what happened with Asda where their existing card closed and a completely new one opened - the difference being that JL aren't leaving a gap between the old closing and the new appearing, which is leading to confusion over why nothing is being transferred.

I know it's not JL's book, but if they really have no control then it shows either naivity or poor management on their part.

HSBC/JLFS controls the risk and methodology for customer acceptance, but JL should have understood that up front and ensured it was aligned the the demographic of their intended client base. Likewise they should have agreed upfront service standards with penalties for not meeting them, including the option to move the book in a way that made the risk transparent for a new provider to assess.

Given we know HSBC has some of the most stringent lending criteria around, coupled with the typical customer demographic (ie JL/Waitrose shoppers), it's hard to understand why there aren't other providers queuing up to take what must be a pretty prime book. Unless HSBC is being obstructive in providing information about it...

(this isn't a subject area I'm totally unfamiliar with, by the way...!)

Can you cite an example of when a co-branded credit card product has been moved from one issuer to another and the book has been transferred with it?

The normal thing to happen is the losing provider simply keeps the book but drops the co-branding. Normally this is done a while before the new card becomes available - sometimes they overlap a little (as was the case with IHG when they moved from Barclaycard to Creation and Virgin Atlantic when they moved from MBNA to Virgin Money, from memory both had an overlap of 6 months-a year). 

I don't know for certain, but it seems rather like ownership of the book is something co-brand partners quite deliberately have nothing to do with.

The JLFS situation is notable in that there is a very short period of overlap with the new JL/NewDay and that HSBC is just shuttering the whole operation rather than trying to do anything with the (relatively prime) book.

however what is different with HSBC is that they have effectively created subdivision to operate this type of cards (both JLP and M&S) which is a bit more complicated then just have a co-branded card.

I agree that is a small difference, however far from insurmountable - HSBC could simply sell themselves the JLFS customers and transfer the book if it was worth doing. It just adds to the picture that ultimately HSBC wasn't making very much money from this operation.

To the earlier question posed at me - I should probably clarify that whilst I am familiar with various client/risk books moving from one institution to another, that's not in the CC space - so if there really no examples of that ever having happened before then so be it - it just struck me that a prime book would have considerable interest, and so the only logical reason for it not being a seamless transfer was that HSBC was being obstructive over what the book/risk actually looked like. And if that was the case, I'd be laying the blame for that at JLs door for not having previously agreed a good process for 'transfer of business' with HSBC.

Interesting discussion about the changing landscape though, interchange fees etc - I had assumed that JL themselves subsidised the rewards on this card, especially as 1.25% on spend in their stores obviously didn't cost them that - once margins were taken into account?

I guess though if the book just isn't attractive though, maybe this isn't all HSBCs fault. Even if the current abysmal service level is!

My guess would be that JL paid a hefty comission to JLFS for in-Waitrose and in-JL spend, more than 1.25%. If this was the revenue stream which kept the card viable, perhaps it's no wonder HSBC are chosing to walk away once that revenue is gone.

As previously noted there are regulatory reasons as to why ultimately the book stayed with JLFS, otherwise every co-brand card which has ever been replaced by another would result in the book transferring with the brand - the fact that has literally never happened should probably tell you that your expectation of how JL should manage that is a little off.

WillPS

swabaxter said:

The days of the credit card are numbered. The best facility is that from one of the new Smart phone app based banks which provide excellent service and great flexibility. Use Apple Pay and not only do you have great convenience but security is state of the art too.

I'm not sure I get how 'excellent service' and 'great flexibility' have much to do with making a debit product more attractive than a credit one.

[Deleted User]

swabaxter said:

The days of the credit card are numbered. The best facility is that from one of the new Smart phone app based banks which provide excellent service and great flexibility. Use Apple Pay and not only do you have great convenience but security is state of the art too.

Not in the least, aside from the odd debit that does cashback like chase, the additional cover of S75 alone, let alone chargebacks, up to 56 days interest free etc make credit cards far superior