Building The Perfect Credit Card - Innovation In Canada & Abroad
Competition in the Canadian credit card marketplace is as fierce as ever. We’ve seen new partnerships, new issuers, new technologies, and new products launched at an unprecedented rate in the last few years.
But the real question is, have we seen the type of jaw dropping innovation in the Canadian credit card marketplace that will wow Canadians, adjust their credit card behaviour or compell them to switch cards.
We’ve assembled some of the more innovative credit card features and offers we’ve seen from around the world, and from Canada itself.
We’d love to hear from you as to which credit card features are you favorites, add any that you think should be listed and which just might be enough to force you to switch.
|Issuer||Country||Credit Card||Innovative Product/Offer|
|U.S.||One free year of Amazon Prime membership|
|U.S.||20% statement credit for any UBER ride|
|U.S.||$650 smartphone credit, after $2,000 in spend|
|U.S.||Earn cashback with 1% on spend & 1% on Payments|
|U.S.||Free FICO Score|
|Canada||Does not charge foreign transaction fees(typically 2.5%)|
|Canada||Links retail promotions directly to credit cards with discounts appearing as statement credits|
|Canada||Mobile device insurance (phone, tablet)|
|U.K.||0% balance transfer for 36 months|
|Australia||55 day grace period|
So if it was up to you, what credit card features would you want added to your credit card? What would convince you to switch credit cards? Have you seen an innovative credit card product, feature or offer that Canadians should be begging their credit card issuers to adopt? Let’s see if we can help build the best credit card Canada has to offer!
The above is certainly not an exhaustive list, but it does raise questions. Why are some product features that have been available elsewhere for years, still not available in Canada.
For example, when it comes to playing the interest rate game, Canadian credit card issuers are far less aggressive than their counterparts in the U.S., U.K. and Australia. Whereas, consumers have a bevy of 24 to 36 month 0% offers to choose from, Canadians only have one issuer offering a low balance transfer credit card at 0% for 12 months, and none offering 0% interest on new purchases for 12 months or more.
Free Credit Scores
We are starting to see U.S. issuers offering free credit scores to their customers – a number so essential, it’s a wonder it hasn’t been made free sooner. In Canada, some issuers, like Desjardins have just now started to make it available free, but only to their student segment. Given the bank’s interest in having their customers properly manage their credit, we think it’s in their interest to share the number that often forms the basis of their application decisioning and pricing – obviously subject to Equifax and TransUnion playing ball.
No Foreign Transaction Fees
While many U.S. issuers are beginning to cancel foreign transactions fees, the trend has yet to catch-on in Canada, save for Chase Canada’s family of cards and Rogers Bank, which has just added the feature. The problem for Canadian banks is that a much higher percentage of Canadian credit card spend is foreign (online and travel), than that of their American counterparts. So giving up on the foreign transaction fees will have a much bigger impact on Canadian credit card P&L’s.
Credit Card Linked Offers
We believe this is the future of credit card rewards. With this technology, customers do not need to present a coupon to redeem an offer, they simply need to pay with the card which is linked to the offer. For example, Staples can now say we’re offering 10% off to all BMO cardholders in Ontario for the week (plus even more sophisticated behavioural targeting). Customer pays with their BMO card and they get the 10% off in the form of a statement credit. This will allow credit cards to be the nexus of far greater rewards than the mere 1%-2% currently funded out of interchange.
Size of Welcome Bonuses
One thing that is strikingly clear, is that Canadian credit card issuers tend to offer far smaller welcome bonuses than their U.S. counterparts. For example, Chase Marriott offers a welcome bonus of 30,000 points in Canada, but 50,000 points in the U.S. Amex offers 20,000 Starwood welcome points in Canada, but 25,000 in the U.S. AND a first year annual fee waiver. Whether it’s because of less competition, more bank discipline, or different credit card P&L’s, we don’t know – but the evidence is clear, Canadians consumers get far less than Americans for the same product.
The Canadian credit card market is largely saturated with partnership and retail credit cards i.e. Sears, HBC, Shoppers, Sobeys, PC Bank, Canadian Tire, Costco, Walmart, Telus, Rogers, Tim Hortons, Amazon, Shell, Esso, Petro, WestJet, Alaska Air, Aeroplan, Air Miles, etc… But what consumers really want are discounts on products and services. Canadians don’t care where they get their gas, as long as it’s cheaper.
That’s why bank credit cards will start to make more direct deals with product providers, cutting out the need or relevancy of stand alone partnership credit cards. For example, why bother getting a Petro-Canada MasterCard when you can get 4% cash back on gas from your Scotia Momentum Visa card? Why have an Amazon card, if Amazon can offer their 5% cash back promo to all TD customers if they wanted, or give Amazon Prime away for a year as Amex is doing in the U.S.
Have any other innovations or product features you’d like us to include, let us know, Canadian banks are listening – we hope!