JaJa credit card unexplained closure of account

CliveOfIndia

WillPS said:

CliveOfIndia said:

The fact that you pay no interest is neither here nor there - any card issuer will still get plenty of income from the merchant fees they rake in every time you use the card.

It's a commercial decision by the card issuer, end of story.  It's nothing personal.

Why are you still peddling this myth? The amount of money that any UK Visa or Mastercard issuer AND Visa or Mastercard get from a UK merchant is (no more than) 0.3% combined. 

It's not a myth, it's fact.  May I ask if you've ever worked for a bank or credit card issuer?  I have done for the majority of my working life.

I'm not disputing the fact that customers who do pay interest add to a card issuer's income stream.  But if you don't pay interest, that doesn't make you an unwanted customer.  0.3% of the billions of pounds that are collectively spent on credit cards every month is a not insignificant sum.

One source of figures, if you're interested: https://www.ukfinance.org.uk/data-and-research/data/card-spending

"There were 355.1 million credit card transactions in November [2022], 0.3 per cent more than in November 2021. The total spend of £19.6 billion was 5.3 per cent higher than November 2021.

lr1277

Let’s round up your figure to £20 billion.
0.3% of that is €60 million.
isn’t that split between the card network and the bank/financial institution?
So say £30 million to the bank.
Doesn’t seem like a lot when you think that has to be split amongst all the banks that provide credit cards.
Or am I missing something?

WillPS

CliveOfIndia said:

WillPS said:

CliveOfIndia said:

The fact that you pay no interest is neither here nor there - any card issuer will still get plenty of income from the merchant fees they rake in every time you use the card.

It's a commercial decision by the card issuer, end of story.  It's nothing personal.

Why are you still peddling this myth? The amount of money that any UK Visa or Mastercard issuer AND Visa or Mastercard get from a UK merchant is (no more than) 0.3% combined. 

It's not a myth, it's fact.  May I ask if you've ever worked for a bank or credit card issuer?  I have done for the majority of my working life.

I'm not disputing the fact that customers who do pay interest add to a card issuer's income stream.  But if you don't pay interest, that doesn't make you an unwanted customer.  0.3% of the billions of pounds that are collectively spent on credit cards every month is a not insignificant sum.

One source of figures, if you're interested: https://www.ukfinance.org.uk/data-and-research/data/card-spending

"There were 355.1 million credit card transactions in November [2022], 0.3 per cent more than in November 2021. The total spend of £19.6 billion was 5.3 per cent higher than November 2021.

Your maths is completely ignoring the cost of servicing individual customers though.

Perhaps with your depth of knowledge you can tell us what the cost of getting a physical card printed, stuck to a letter and delivered to customers, for starters. Perhaps you could additionally tell us the ratio of customer service staff to customers, and what the resultant blended cost per customer is?

Your maths also completely ignores the fact that the 0.3% is paid not to the issuer but to Visa/Mastercard, who in turn pay the issuer a commission - but most certainly this is not 100% of that 0.3%, otherwise Visa/Mastercard would earn nothing. But lets ignore that and go with 0.3% accepting that is an overestimation.

How much does the customer need to spend in order to generate sufficient interchange derived revenue cover the cost of a physical card being provided?

Same for that blended customer service cost?

And for a bit of Friday fun, how about managing the risk of S75 liability - how much revenue from every £ do you expect to have to subsequently pay back to the customer?

CliveOfIndia

lr1277 said:

Let’s round up your figure to £20 billion.
0.3% of that is €60 million.
isn’t that split between the card network and the bank/financial institution?
So say £30 million to the bank.
Doesn’t seem like a lot when you think that has to be split amongst all the banks that provide credit cards.
Or am I missing something?

No, you're absolutely correct.  Going by your figures, let's assume the £30 million to the banks is correct.  How many banks are there in the UK?  If we say there's 30, that's £1 million income every month for every bank.

Of course, of all the banks in the UK, some will have a much larger market share than others.  But even taking the roughly £1 million per month as an average, that's a decent income stream for any business.  And it's a "no hassle" income stream, so to speak, bearing in mind we're talking here about customers that always pay their debts in full every month.

Customers who don't pay in full - of course, they pay interest, which is an added revenue for the bank.  Although that needs to be balanced against the fact that the money outstanding is not sitting in the bank's pocket, so they can't use that for other investment activities.

WillPS

CliveOfIndia said:

lr1277 said:

Let’s round up your figure to £20 billion.
0.3% of that is €60 million.
isn’t that split between the card network and the bank/financial institution?
So say £30 million to the bank.
Doesn’t seem like a lot when you think that has to be split amongst all the banks that provide credit cards.
Or am I missing something?

No, you're absolutely correct.  Going by your figures, let's assume the £30 million to the banks is correct.  How many banks are there in the UK?  If we say there's 30, that's £1 million income every month for every bank.

Of course, of all the banks in the UK, some will have a much larger market share than others.  But even taking the roughly £1 million per month as an average, that's a decent income stream for any business.  And it's a "no hassle" income stream, so to speak, bearing in mind we're talking here about customers that always pay their debts in full every month.

Customers who don't pay in full - of course, they pay interest, which is an added revenue for the bank.  Although that needs to be balanced against the fact that the money outstanding is not sitting in the bank's pocket, so they can't use that for other investment activities.

You're completely ignoring the cost of servicing customers, once again. You can't just divide by number of issuers, you need to divide by number of *customers* and then try to work backwards from that to work out what the cost of laying on service for that customer is.

You're also basing your 'monthly' figures on a November, which is the month with highest consumer spend.

Even accepting all this misleading fag paper maths - that you consider £1m *revenue* significant perhaps indicates that you're a little more naive to the realities of the costs of banking than a person with your wealth of sector specific experience should be.

CliveOfIndia

WillPS said:

CliveOfIndia said:

WillPS said:

CliveOfIndia said:

The fact that you pay no interest is neither here nor there - any card issuer will still get plenty of income from the merchant fees they rake in every time you use the card.

It's a commercial decision by the card issuer, end of story.  It's nothing personal.

Why are you still peddling this myth? The amount of money that any UK Visa or Mastercard issuer AND Visa or Mastercard get from a UK merchant is (no more than) 0.3% combined. 

It's not a myth, it's fact.  May I ask if you've ever worked for a bank or credit card issuer?  I have done for the majority of my working life.

I'm not disputing the fact that customers who do pay interest add to a card issuer's income stream.  But if you don't pay interest, that doesn't make you an unwanted customer.  0.3% of the billions of pounds that are collectively spent on credit cards every month is a not insignificant sum.

One source of figures, if you're interested: https://www.ukfinance.org.uk/data-and-research/data/card-spending

"There were 355.1 million credit card transactions in November [2022], 0.3 per cent more than in November 2021. The total spend of £19.6 billion was 5.3 per cent higher than November 2021.

Perhaps with your depth of knowledge you can tell us what the cost of getting a physical card printed, stuck to a letter and delivered to customers, for starters. Perhaps you could additionally tell us the ratio of customer service staff to customers, and what the resultant blended cost per customer is?

Your maths also completely ignores the fact that the 0.3% is paid not to the issuer but to Visa/Mastercard, who in turn pay the issuer a commission - but most certainly this is not 100% of that 0.3%, otherwise Visa/Mastercard would earn nothing. But lets ignore that and go with 0.3% accepting that is an overestimation.

How much does the customer need to spend in order to generate sufficient interchange derived revenue cover the cost of a physical card being provided?

Same for that blended customer service cost?

And for a bit of Friday fun, how about managing the risk of S75 liability - how much revenue from every £ do you expect to have to subsequently pay back to the customer?

Bear in mind that the cost of providing the credit to a customer is the same whether they are a "full-repayer" or a "balance-carrier".  S75 claims - likewise, that's unrelated to what we're talking about here.

At the risk of repeating myself - no-one is disputing that interest payments provide revenue to a bank.  The nub of the argument is that paying in full every month is not a reason - in and of itself - to close a customer's account, it doesn't mean that the bank isn't still making a decent amount of money from the customer.  If that were the case, every customer of every bank in the country who is a regular "full-repayer" would be having their accounts closed - and that is clearly not happening.

There are many reasons why a particular lender may decide to reduce or re-profile its customer-base, but the argument that paying in full is not profitable to a lender is simply not true.

WillPS

CliveOfIndia said:

WillPS said:

CliveOfIndia said:

WillPS said:

CliveOfIndia said:

The fact that you pay no interest is neither here nor there - any card issuer will still get plenty of income from the merchant fees they rake in every time you use the card.

It's a commercial decision by the card issuer, end of story.  It's nothing personal.

Why are you still peddling this myth? The amount of money that any UK Visa or Mastercard issuer AND Visa or Mastercard get from a UK merchant is (no more than) 0.3% combined. 

It's not a myth, it's fact.  May I ask if you've ever worked for a bank or credit card issuer?  I have done for the majority of my working life.

I'm not disputing the fact that customers who do pay interest add to a card issuer's income stream.  But if you don't pay interest, that doesn't make you an unwanted customer.  0.3% of the billions of pounds that are collectively spent on credit cards every month is a not insignificant sum.

One source of figures, if you're interested: https://www.ukfinance.org.uk/data-and-research/data/card-spending

"There were 355.1 million credit card transactions in November [2022], 0.3 per cent more than in November 2021. The total spend of £19.6 billion was 5.3 per cent higher than November 2021.

Perhaps with your depth of knowledge you can tell us what the cost of getting a physical card printed, stuck to a letter and delivered to customers, for starters. Perhaps you could additionally tell us the ratio of customer service staff to customers, and what the resultant blended cost per customer is?

Your maths also completely ignores the fact that the 0.3% is paid not to the issuer but to Visa/Mastercard, who in turn pay the issuer a commission - but most certainly this is not 100% of that 0.3%, otherwise Visa/Mastercard would earn nothing. But lets ignore that and go with 0.3% accepting that is an overestimation.

How much does the customer need to spend in order to generate sufficient interchange derived revenue cover the cost of a physical card being provided?

Same for that blended customer service cost?

And for a bit of Friday fun, how about managing the risk of S75 liability - how much revenue from every £ do you expect to have to subsequently pay back to the customer?

Bear in mind that the cost of providing the credit to a customer is the same whether they are a "full-repayer" or a "balance-carrier".  S75 claims - likewise, that's unrelated to what we're talking about here.

At the risk of repeating myself - no-one is disputing that interest payments provide revenue to a bank.  The nub of the argument is that paying in full every month is not a reason - in and of itself - to close a customer's account, it doesn't mean that the bank isn't still making a decent amount of money from the customer.  If that were the case, every customer of every bank in the country who is a regular "full-repayer" would be having their accounts closed - and that is clearly not happening.

There are many reasons why a particular lender may decide to reduce or re-profile its customer-base, but the argument that paying in full is not profitable to a lender is simply not true.

It costs about £5 to issue and deliver a credit card. If the issuer got 0.3% in interchange derived revenue (and they won't on UK transactions), the customer would need to spend £1666.67 to generate £5 revenue for the issuer.

That is only one very small (but easy to pin down) cost associated with running a credit card. The others I mentioned, customer service and S75 liability, absolutely are relevant when trying to make a reasonable judgment about how profitable a customer is. There's also the cost of taking payment for settlement - if they accept debit cards for payment they will likely have to pay *their* acquiring bank far more than the 0.3% they received comission from in the first place; but every form of payment will cost them something.

Factor in too that the Post Office userbase skews older and will be more reliant on paper statements (each of those costs £1 or so to get to a customer - £333 worth of interchange revenue).

There is no money at all to be made from a customer who uses their card in the UK alone and always pays their bill in full, unless there's some sort of comission from specific merchants (hello, Asda card...). 

Did you get your cancellation email btw?

CliveOfIndia

WillPS said:

CliveOfIndia said:

WillPS said:

CliveOfIndia said:

WillPS said:

CliveOfIndia said:

The fact that you pay no interest is neither here nor there - any card issuer will still get plenty of income from the merchant fees they rake in every time you use the card.

It's a commercial decision by the card issuer, end of story.  It's nothing personal.

Why are you still peddling this myth? The amount of money that any UK Visa or Mastercard issuer AND Visa or Mastercard get from a UK merchant is (no more than) 0.3% combined. 

It's not a myth, it's fact.  May I ask if you've ever worked for a bank or credit card issuer?  I have done for the majority of my working life.

I'm not disputing the fact that customers who do pay interest add to a card issuer's income stream.  But if you don't pay interest, that doesn't make you an unwanted customer.  0.3% of the billions of pounds that are collectively spent on credit cards every month is a not insignificant sum.

One source of figures, if you're interested: https://www.ukfinance.org.uk/data-and-research/data/card-spending

"There were 355.1 million credit card transactions in November [2022], 0.3 per cent more than in November 2021. The total spend of £19.6 billion was 5.3 per cent higher than November 2021.

Perhaps with your depth of knowledge you can tell us what the cost of getting a physical card printed, stuck to a letter and delivered to customers, for starters. Perhaps you could additionally tell us the ratio of customer service staff to customers, and what the resultant blended cost per customer is?

Your maths also completely ignores the fact that the 0.3% is paid not to the issuer but to Visa/Mastercard, who in turn pay the issuer a commission - but most certainly this is not 100% of that 0.3%, otherwise Visa/Mastercard would earn nothing. But lets ignore that and go with 0.3% accepting that is an overestimation.

How much does the customer need to spend in order to generate sufficient interchange derived revenue cover the cost of a physical card being provided?

Same for that blended customer service cost?

And for a bit of Friday fun, how about managing the risk of S75 liability - how much revenue from every £ do you expect to have to subsequently pay back to the customer?

Bear in mind that the cost of providing the credit to a customer is the same whether they are a "full-repayer" or a "balance-carrier".  S75 claims - likewise, that's unrelated to what we're talking about here.

At the risk of repeating myself - no-one is disputing that interest payments provide revenue to a bank.  The nub of the argument is that paying in full every month is not a reason - in and of itself - to close a customer's account, it doesn't mean that the bank isn't still making a decent amount of money from the customer.  If that were the case, every customer of every bank in the country who is a regular "full-repayer" would be having their accounts closed - and that is clearly not happening.

There are many reasons why a particular lender may decide to reduce or re-profile its customer-base, but the argument that paying in full is not profitable to a lender is simply not true.

There is no money at all to be made from a customer who uses their card in the UK alone and always pays their bill in full

So please explain why the (approximately) 50% of cardholder in the UK who do pay their balances in full have not all had their accounts closed.

JaJa appears to be one provider who, for whatever reason, are closing a lot of accounts.  But the majority of other lenders seem to be perfectly happy to keep their "always-pay-in-full" customers.

*California*

I would be happy if they could transfer me to another provider.

CliveOfIndia

*California* said:

I would be happy if they could transfer me to another provider.

They won't be able to do that - not least because all providers will have different acceptance criteria.  The simplest thing would be to run a few eligibility checks, see which cards you're likely to be accepted for (bearing in mind that an eligibility checker is no guarantee) and apply for a new card elsewhere.