On September 6th, Rogers Communications announced that it received permission from OSFI to issue credit cards. Earlier last year Rogers registered a bank subsidiary, which at the time was largely regarded as a precursor to issuing its own credit cards. Rogers has now confirmed that it intends to start issuing credit cards as early as 2014.
“Our credit card business will allow us to deliver a valuable offering to our customers across the country and we are thrilled to have completed this final step in the application process,” said David Robinson, Vice-President of Emerging Business, Rogers Communications. “Within the next year, our customers will be able to participate in our credit card program that will give them the opportunity to accelerate the rate at which they earn rewards in the Rogers First Rewards program.”
We believe two things have led Rogers to offer a credit card. First, Rogers has deep and relevant touch-points with its customers, which gives it the ability to create a unique cardholder value proposition in the Canadian credit card landscape. Rogers represents a significant portion of Canadian consumer budgets and daily lives, touching TV, Internet, Landline, Mobile, Magazine, and online content. This gives Rogers the ability to offer a great rewards value proposition, which would be unique in the marketplace. It would also give them the ability to offer rewards that would be attainable more quickly but still have a high perceived value to cardholders. For example, those cardholders who don’t spend enough to earn a flight, can now earn enough rewards for a phone upgrade, free downloads, or free minutes instead of a toaster or blender.
Second, with the big three telcos having achieved market saturation levels, each will have to concentrate on retention more than growth. Every dollar invested in reducing churn will go a lot further than the next dollar invested in acquiring a new customer. Offering a loyalty program, funded by a credit card, will give Rogers’ customers a reason to stay longer and use the service more.
What we do find interesting, is Rogers decision to issue the credit card on its own, as opposed to partnering with an issuing bank. We believe that it indicates Rogers wants the flexibility to not only control its rewards program (which it could do with a partnering bank), but that it also wants to control its entrance into the mobile payments space, without being hamstrung by a contracted partnership with an issuing bank. Perhaps Rogers wanted to retain the ability to introduce innovative payment products / technologies, or underwriting for that matter, without having to receive the permission from a partnering financial institution.