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Important changes are coming to Rogers and the Fido Mastercard
March 19, 2018
5:02 pm
Kidd
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March 20, 2018
8:10 am
Doug
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Loonie said
could you explain further why you see CC business declining overall? I realize a lot of people now use debit (although I can't figure out why you would if you can use CC). But the banks must make a ton of money on late payments etc. and also take a share from merchants, so what's the problem? Why do you think they would take people's CCs away?  

I don't mean they're going to wind down their credit card balance significantly - yes, they are profit centres. However, for the reasons I outlined vis-a-vis significantly slower consumer loan and mortgage growth, the banks being overcapitalized in consumer deposits versus loans and mortgages, etc., there will be increasing pressure to cost costs. All of these high reward rates, no FX fees, and new customer promo offers, not to mention all of these private-label and co-branded credit cards, come at a cost. Banks have already cut the "low hanging fruit" to expand margins, and even though there's slower consumer loan growth, with tightening in terms of mortgage rates, the banks have complete control to rescind credit card offers and shutter a bunch of co-branded credit cards with little uptake. In this way, they won't "take away" people's credit cards, but they will likely migrate them to existing cards in a "slimmed down" lineup of cards.

Just look at the flatlining, to even potentially declining, growth rates of Rogers Bank's portfolio and its continued unprofitability. Management won't want to be patient forever, and these changes were likely prompted by management demanding at least greater growth rates and, ideally, a plan to turn a profit. CIBC and TELUS Corporation ended a co-branded TELUS Rewards Visa card issued and owned by CIBC. Not sure who terminated the agreement, though they likely said it was a "mutual decision." Regardless, it was a cost to CIBC, and it wasn't generating any return for TELUS.

I had planned to share this in a separate thread, but likely after experiments by Meridian and Sunova credit unions with Collabria Financial, all B.C. credit unions, many Alberta and Saskatchewan and most Ontario credit unions have now either completed or announced plans to switch from dominant credit card issuer for credit unions, CUETS Financial, owned by TD Canada Trust through its MBNA division, to Collabria Financial. Many of the credit unions are having to start up new credit card portfolios with their clients, so it's a big move for them, but the potential benefits are enormous since Collabria offers CUs a program to co-own their credit card portfolios even if Collabria has them on its balance sheet. Some have opted to buy out their existing portfolios from CUETS, but for those that haven't, those customers will now end up with a plain vanila CUETS Financial-branded Choice Rewards MasterCard (many of which will likely get closed now that their CU can longer service, or even accept in some cases, in-branch bill payments) and a new co-branded CU MasterCard or Visa by Collabria, once they are upsold by their CU (which will be a massive conversion opportunity for their CSRs and sale staff as they have somewhat of a "captive audience". TDCT has also been whittling down their MBNA branded cards and co-branded affinity card portfolios in a big way. I expect their credit card portfolio balances to shrink significantly.

Bottom line: less competition = more leverage for the banks

Does that help?

Cheers,
Doug

March 20, 2018
8:43 am
Loonie
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It's pretty complicated!

If the CUs are all going together under the one umbrella, Collabria, shouldn't that lead to greater efficiencies and better deals for customers? Who owns Collabria? - their website is uninformative. I had the vague recollection it was perhaps owned by Desjardins?
Also, as Collabria is all MC, that might make life more difficult for Visa?

March 20, 2018
11:08 am
gicjunkie
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davidgeorge said
https://rogersbank.com/en/notification

Starting May 23, 2018
Earn 3% unlimited cash back rewards on all your eligible purchases made in a foreign currency

Earn 2% unlimited cash back rewards on Rogers™ products and services charged to your card including your Rogers, Fido™ or chatr™ monthly bill

Earn 1.25% unlimited cash back rewards on all other eligible purchases  

Please see my entry under the "Credit Cards Rewards Progams" thread for details of a new Rogers MC. This is a brand new card. The old card will still be available.

March 20, 2018
12:13 pm
Doug
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Loonie said
It's pretty complicated!

If the CUs are all going together under the one umbrella, Collabria, shouldn't that lead to greater efficiencies and better deals for customers? Who owns Collabria? - their website is uninformative. I had the vague recollection it was perhaps owned by Desjardins?
Also, as Collabria is all MC, that might make life more difficult for Visa?  

I don't know who owns Collabria Financial, but I doubt it's Desjardins, since they already provide both co-branded and private-label credit cards through their Desjardins Card Services and AccessD programs. Some credit unions, like Coast Capital Savings, still use Desjardins. So they would be one of the three major credit card issuers alongside TDCT's CUETS Financial and Collabria Financial. Historically, they were #2, but given the migration to Collabria, they will be wrestling with Collabria for second place until CUETS Financial moves down to third place.

I'm not sure there's any greater efficiencies to be had, since the CUs have already outsourced or, offloaded, rather (a better term) their credit card divisions to either CUETS, Desjardins, or Collabria. This is just a shift from one provider to another. Sorry for including that in that post - it really has nothing to do with my further rationale on why I think banks and CUs will "slim down" their credit card offerings. 😉

Edit: Oh, they've updated their website since I last checked. Interesting, Desjardins is one of three shareholders in them, alongside Co-op Financial Services (based in Rancho Cucamonga, Calif. of all places, always loved that city name!) and TMG Financial Services (based in Clive, Iowa). Interestingly, that latter one, TMG, has sample credit card images that look similar in style to Collabria's so perhaps they developed the initial technology back-end and processing infrastructure for Collabria? Co-op seems to be a back-end provider like our provincial credit union Centrals that provides services, mainly, to U.S. credit union members. Desjardins, in addition to being the Quebec- and Manitoba-based (formerly Ontario, until they sold off Ontario's last remaining caisse populaires to Meridian Credit Union a few years ago) Central for caisse populaires, provides back-end services to many Canadian CPs and CUs. I see why they formed this joint venture now: to service CUs and CPs on both sides of the Canada/U.S. border.

They're keeping it separate from Desjardins Card Services, so they can capture CUs through both "streams". Desjardins, I have to say, is one of Canada's most brilliant FIs. sf-cool

It's important to point out that credit card issuers in Canada aren't regulated by OSFI. FCAC regulates them in terms of consumer disclosures, but that's about it.

Also, Collabria offers both Visa and MasterCard, depending on the wishes of the CU/FI with which they've partnered. That could be another reason for the migration.

Cheers,
Doug

March 20, 2018
12:19 pm
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WHO IS COLLABRIA?

Collabria combines the very best of three companies — Desjardins, TMG and TMG Financial Services (TMGFS) –with more than 100+ years of collective experience. Together, these three companies heard the needs of Canadian credit unions and joined forces to create a payment solutions provider founded on partnership, collaboration and responsiveness. In addition to these partnerships, Collabria boasts strong relationships with First Data Corporation, Visa®, MasterCard®, plastics producers, electronic payment vendors and many more businesses to help create workflow efficiencies, scalable cost‐effective alternatives and outstanding member experiences.

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