Where is the competition in the Irish credit card market?

I recently had cause to review the competitive offerings in the Irish card market and was left a little underwhelmed.  A few years ago there was a proliferation of credit card offers available to the Irish consumer however since then we have witnessed numerous players exit market leaving the competitive landscape less than competitive!

In 2011, MBNA, which would have typically had some of the best rates exited the Irish credit card market leaving just six issuers for consumers to chose from: PTSB, Ulster, BoI, Tesco, Dankse and AIB.  Of those, I suspect that at least two are very passive competitors.

The overall result is a distinct lack of competition and complete lack of innovation! The offerings are quite homogeneous, with interest rates being the main headlines from each market player.  I believe that there is huge scope in the Irish market for something new.  In the UK, there has always been healthy competition with balance transfer offers incentivising consumers to move between companies in search of the best deal as well as some very interesting loyalty reward options, driven by cardholder spend dynamics.

Here, credit card payments continue a downward trend –the number of credit card payments has dropped by 14% since 2008, and is still falling.  According to the Central Bank, in 2008, there were over 2.2m personal credit cards in circulation, this has reduced year-on-year and latest figures show just over 1.8m personal credit cards.  The Irish are uniquely disciplined with regards to credit card payments with many paying their full credit card each month.

Conversely, debit card use is growing, rising by an estimated 14% annually.  The rollout of Visa Debit may well have displaced some credit card usage over the past year or two however the lack of competition, and exit of some issuers, has had an adverse impact.

Over the next month of two, action in the credit card market will revolve around the annual surge in marketing and promotion to woo new third level students to sign up to their services.  Other than this, it would appear that credit card companies are primarily focused on selling to their existing customer base rather than competing against each other.  This is not helped by the ridiculous €30 Government Stamp Duty, which is levied annually, an obstacle to effective competition and switching in the market (but perhaps it suits the incumbents?)

Interestingly, customers are entitled to a refund of the €30 fee if they switch cards mid-year, this is not well understood and nobody seems to make the process easy.

So in reality, competition really only exists for some distinct market segments at certain times of the year, suitably discouraged by the stamp duty constraint. 

This is in marked contrast to the UK market and I believe that there is a significant gap, and opportunity, for a really innovative and compelling consumer proposition, something to shake up this market and create true competition.

Sources: Central Bank Statistics & Central Bank Report April 2013