Australian retailer Woolworths Limited has applied for a special credit card licence with bank regulators in the country and plans to begin issuing its own branded cards from 2007, undermining an exclusive joint venture banking project established with Commonwealth Bank.
The retailer currently issues co-branded MasterCards credit and debit cards to customers in Australia via its store-based Ezy Banking venture, which it formed with the Commonwealth Bank of Australia in 1999.
The EZY Banking buisness is aimed at low income CBA customers, with banking services delivered via Woolworth supermarkets. Customers can withdraw cash from accounts at the supermarket checkout but cannot conduct transactions in CBA bank branches.
Local news service The Sheet estimates Commonwealth Bank’s accumulated losses on Ezy Banking exceed $100 million, though the brand is now believed to be profitable.
However, if Woolworths gets the go ahead from the Australian Prudential Regulation Authority to expand its financial services offerings, it says any exclusivity arrangements with CBA via the Ezy Banking alliance would be cancelled for credit cards and any wealth management products it launches.
But the firm the exclusivity provisions in place with CBA regarding debit cards and deposit products will remain in place.
If it receives approval from the regulator, Woolworths will become just the third non-bank entity to enter the Australian card market after GE Capital and MoneySwitch. Australia Post also has a license application under review.