Consumer Card Spending is finally getting rewarded in Ireland

For years, the Irish market has lagged behind the UK market in terms of consumer and credit card reward schemes.  It’s common practice in the UK for consumers to get rewards every time they spend or use a particular card, be in from a bank or other card issuer.  For example, Amex runs a cash back incentive scheme with a range of credit cards, where consumers can earn rewards every time they use the card.  Nationwide offer the ‘Select credit card’ which gives unlimited 0.5% cashback on all UK spending and has no exchange fees on overseas transactions.  Both Asda and Amazon also offer rewards linked to spending.  The ‘Asda Money card’ gives 1% 'cashback' on shopping at Asda, including online and fuel, and 0.5% back everywhere else.  The ‘Amazon  Platinum card’ gives 1.5 in Amazon Reward Points for every £2 spent at Amazon and 1 point for every £2 spent elsewhere.

However, this has not been a feature in the Irish market to date.  There was one strong Tesco Credit Card reward offering - the Clubcard Credit Card -but this is not currently available to new customers as they have just announced they are leaving the market. 

In the past few months, the two major banks AIB and Bank of Ireland, with circa 35% market share each have both announced new card schemes for different spend types and levels.

BoI’s ‘Rewarding You’ is their new loyalty programme.  They have teamed up with SuperValu so that when consumers use their personal credit cards for purchases anywhere they can earn SuperValu Real Rewards points.  This applies for purchases both at home or abroad.  It has been heavily marketed by both parties and is clearly a key offering for both for 2017.  Interestingly this doesn’t appear to have any wider commercial arrangements; it is limited purely to credit card spend and can only be redeemed in SuperValu outlets.  This appears to be an attempt by BoI to incentivize cardholders to spend more on a day-to-day basis using their credit cards.

AIB has a taken a different approach, in that they are enticing customers to spend using both debit and credit credits.  Their ‘AIB Everyday Award’ scheme rewards consumer spend with cash back in a range of outlets.   This is in partnership with Visa, so AIB can offer a broader range of offers as they are using the Visa reward platform.  Consumers receive cashback from a range of large household brands such as Lidl, Topaz, Easons, H&M and Boots.

For both AIB and BOI, these are clearly designed to attract market share in terms of new credit card customers, as well as encourage spend amongst their existing cardholders.  BOI is focusing solely on credit cards, which limits the offer somewhat as traditionally Irish consumers would not use credit cards for everyday spend.  AIB’s offer gives greater flexibility, in terms of card usage and in terms of the choice of retailers that are involved.  Consumers can recoup their rewards in more than just a grocery shop as with the BOI offer -this will appeal to a wider demographic.

Other players also have more limited offers in this space.  For example, with a KBC credit card you get 1% cash reward on grocery and online purchases however this is quite restricted. 

  

PTSB has a general ‘GoREWARDS’ loyalty programme however it is multi-product.  This offers consumers cashback on a wide range of popular high street and online brands, such as LIDL and M&S.  As with the AIB offer, this is in partnership with Visa.

Overall this is a welcome development for Irish card consumers.  They are getting something in return for spend, and this will offer an incentive to use cards more often.

For the banks, clearly there is a cost involved, especially for AIB and BOI, however it offers them a strong customer retention tool.  Notwithstanding the lower Interchange environment, they have clearly decided that card portfolios are worth investing in. As the dominant players in the market, this will surely lead to challenger brands upping their offering to mitigate this. Interestingly, Chill Money has just launched a new credit card, in association with Avantcard, however it does not have a reward offer at this stage.  

For the financial services market in general, it’s a positive development for the Cards market after a period of little competition over the past 6 to 8 years.  It will be interesting to see how other competitors will react in coming months.