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It's Time For Issuers To Play Their Cards Right

The US is introducing new rules that will require credit card issuers to introduce regulatory changes affording greater protection for cardholders. We can anticipate a similar approach to be mandated globally.

“And not before time!” cry the members of the public. “The banks have been exploiting us for years.  They suck us in with low interest balance transfers…not telling us that they have to be paid off completely before any repayments are applied to interest earning purchases.  The lowest interest earning purchases are always paid off first, regardless of timing…and they lift the interest rates anytime they choose…greedy, appalling behaviour!”.

“Whoa there…this will cost us a packet…don’t the reggies know that we’ll need to pass these costs on to cardholders anyway?” reflects the Ace of Cards in the Bank of Losers.  “We’ll need to build in system changes, reassess our revenue, customer profiles and cash flows, wind up some of our products, change all of our terms and conditions…it’s going to blow our budgets out of the water!”.

Seriously, there are lessons to be re-learned here that we have lost over time.  I remember back at school during lunch breaks…outside of exam times…if it was raining, some of us played cards…ok, I could have done more reading but that’s not the point here.

Playing cards was permitted at our grammar school mainly because the mathematics head played cards with the other teachers every lunch time in the staff room!  We played 3 card brag.  You’re dealt 3 cards face down.  You can ‘go blind’…in which case you bet without seeing your hand…the beauty there is that everyone who isn’t ‘blind’ has to bet twice the amount of a ‘blind man’.  The only other rule is that only a ‘blind man’ can ‘see’ a ‘blind man’.  Those who have looked at their cards must continue to bet or fold until the last ‘blind man’ wants to ‘see’.

Naturally, ‘blind men’ who count cards have a much better chance than ‘blind men’ who can’t count.  The latter will lose heavily and fast…unless they are extremely lucky.

Here’s the parallel that I draw.  The Ace of Cards in the Bank of Losers is the ‘blind man’ who doesn’t count the cards.  He/she plays the game of credit card issuing with other issuers thinking that they have a chance of winning market share without understanding what it takes.  Luckily for them, other issuers are also ‘going blind’ so none of the issuers have any inkling of what it takes to win the game. 

In the game of 3 card brag, the ultimate winners are those who look at their hand, recognise a winning position when they see it and invest big to blow the opposition away.  ‘Blind counters’ always come in second.

The changing of rules in the credit card industry is an opportunity for issuers to make their product the winner by clearly showing their hand to customers…showing that they have good cards and letting the customer ‘see’ what they are buying into.  By ‘dealing fairly’ and ‘playing straight’, they will enhance the public’s perception of how they play the game and enrich the brand which, after all, is the biggest drawcard that any banks have.

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