Question
I just posted in another part of this forum... so pardon my redundancy, but for those of you interested:
my Smith Barney FA called me today to let me know the Chairman card is being phased out in favor of a new card that is the joint venture of Citi, SB and Amex. I don't have really any other details...but i'll post if i find any.
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Hello,
I just got off the phone with a chairman card CSR about an unrelated topic and asked them if they knew about this card being phased out. He said that he has heard that, but doesn't know what is replacing it, when the phase out is beginning, or what happens to current card holders. I would guess that they just have thier accounts closed and then they migrate back over to AMEX Plat, or something.
- SR
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The memo from which my SB guy was reading said early next year... they're in beta testing now. I guess I'd be okay if they migrated us back over to Amex Plat... but really, I chose the Chairman over the platinum. While I loved my Amex, I liked the idea of using my Chairman pretty much everywhere i go... i still run into 1-2 merchants per mo who don't take Amex. sometimes more often.
I guess as long as we don't lose any bennies tho, i'm fine with the change.
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posted to wrong thread.
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this is great.... i just got my new chairman card :rolleyes:
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this is great.... i just got my new chairman card :rolleyes:
I just called Chairman Customer Service. The word is that a new card will be offered in 1 month. Existing cardholders will have the option to switch to the new card or keep the existing card. This is pretty ambiguous, but that is what I was told.
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I just called Chairman Customer Service. The word is that a new card will be offered in 1 month. Existing cardholders will have the option to switch to the new card or keep the existing card. This is pretty ambiguous, but that is what I was told.
The suspense is killing me here. Will the new card have a higher or lower annual fee? Will the benefits be better? If you stay with Chairman, will they eventually terminate you when the card expires? Can you keep using the priority pass card until it expires? And will Chairman customer service/concierge slowly get crappy as they have no incentive to preserve the Card's currently good reputation?
Looks like only time will tell...
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The suspense is killing me here. Will the new card have a higher or lower annual fee? Will the benefits be better? If you stay with Chairman, will they eventually terminate you when the card expires? Can you keep using the priority pass card until it expires? And will Chairman customer service/concierge slowly get crappy as they have no incentive to preserve the Card's currently good reputation?
Looks like only time will tell...
Can't answer all the other questions, but as far as customer service, I read the post as if it will be a Citi-branded Amex, so I'd imagine they would keep the same customer service team. (As you call Citi for issues with any other Citi branded Amex).
Only time will tell for sure though. I guess Amex decided that if the Plat is going to have competition, they should at least be getting their part of the merchant fees. I wonder if Steve Cone's connections (he helped originate Amex Plat and the Citi Chiarman card) had anything to do with this, or if it was purely just coincidence.
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I just called Chairman Customer Service. The word is that a new card will be offered in 1 month. Existing cardholders will have the option to switch to the new card or keep the existing card. This is pretty ambiguous, but that is what I was told.
A CSR today said that some program changes are being made next year...
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Hello,
I was speaking with a Chairman CSR yesterday for almost an hour about a number of things having to do with what features were available to additional cardholders. Basically, only the primary card holder gets the HHonors Gold, and Priority Pass. This is one of my main reasons for not making a complete conversion of my charges to the Chairman Card vs. Amex. With Amex, my additional cardholders get lounge access, and SPG Gold.
While I was going through what other features of the Chairman Card were available only to the primary the CSR mentioned that both the HHonors Gold and the Priority Pass access will be extended to additional cardholders next year as part of the new features. I also asked about airline status and he mentioned that this was something they were looking at, but didn't know where it stood.
The roll out plan for the new features is basically an internal Citigroup test group, i.e. Citigroup employees that have the Chairman Card will get the new features first, then Smith Barney clients, and then everyone else. Once current members have been upgraded, the new card will be rolled out to the public. As far as timing is concerned he mentioned that the internal Citigroup test set is being upgraded in Dec / Jan and are being asked to run very specific tests, e.g. purchase X from Y, call us asking about ABC, etc. Smith Barney clients will be upgraded after the Citigroup employees that are Chairman Card holders, and finally current card holders could be upto six months afterwards.
That's all from me.
- SR
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Hello,
I was speaking with a Chairman CSR yesterday for almost an hour about a number of things having to do with what features were available to additional cardholders. Basically, only the primary card holder gets the HHonors Gold, and Priority Pass. This is one of my main reasons for not making a complete conversion of my charges to the Chairman Card vs. Amex. With Amex, my additional cardholders get lounge access, and SPG Gold.
While I was going through what other features of the Chairman Card were available only to the primary the CSR mentioned that both the HHonors Gold and the Priority Pass access will be extended to additional cardholders next year as part of the new features. I also asked about airline status and he mentioned that this was something they were looking at, but didn't know where it stood.
The roll out plan for the new features is basically an internal Citigroup test group, i.e. Citigroup employees that have the Chairman Card will get the new features first, then Smith Barney clients, and then everyone else. Once current members have been upgraded, the new card will be rolled out to the public. As far as timing is concerned he mentioned that the internal Citigroup test set is being upgraded in Dec / Jan and are being asked to run very specific tests, e.g. purchase X from Y, call us asking about ABC, etc. Smith Barney clients will be upgraded after the Citigroup employees that are Chairman Card holders, and finally current card holders could be upto six months afterwards.
That's all from me.
- SR
I hope I can apply Chairman card without Priority Pass and no annual fee. Because I have ICBC Platinum with Priority Pass (No annual fee in life.)
So can I choose service and pay a part of fee? I do not need some valueless service for me.
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I hope I can apply Chairman card without Priority Pass and no annual fee. Because I have ICBC Platinum with Priority Pass (No annual fee in life.)
So can I choose service and pay a part of fee? I do not need some valueless service for me.
Sorry...no can do...try the Premier Pass with no annual fee..
Chairman does not negotaite the FEE....
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I have ICBC Platinum with Priority Pass (No annual fee in life.)
Does it come with the basic Priority Pass, where every visit is $24, or with unlimited PP where each visit is free? What about for guests?
Citi Chairman is unlimited, with 2 free guests.
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So can I choose service and pay a part of fee? I do not need some valueless service for me.[/QUOTE]
yeah..but if the OP does not travel, why would he need this sevice? Or if he is flying J or F all the time, what difference does it make?
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Does it come with the basic Priority Pass, where every visit is $24, or with unlimited PP where each visit is free? What about for guests?
Citi Chairman is unlimited, with 2 free guests.
Yes, ICBC Platinum (Peony Platinum card)is unlimited, with 1 free guest. No annual fee.
http://www.icbc.com.cn/e_icbcmodule/thirdindex.jsp?column=Bank%2BCard%3EIntroduction%3 EPeony%2BInternational%2BCard
But I like Citi Chairman card other benefits. I guess I can use the Premier Pass Elite Level.
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If Chairmans becomes an Amex, i'll probably switch back to the AA Mastercard. Also, thinking about this a little more, it makes more sense for it to become a World Mastercard Elite. Moving to an Amex would mean that the creditlines become fixed (no revolving + overage is available on any Amex branded product). I think that would be challenging for many users who regularly exceed their credit lines and pay them back in full.
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Citi offers three cards that meet or approach the requirements for Mastercard World Elite: Carte Blanche, Diners Club and Chairman. Inasmuch as this platform will extract higher merchant fees I would expect all three to be migrated.
I would not be surprised to see an American Express version of Chairman card, but I wouldn't expect it to replace the Mastercard product. Look at Citi's other American Express cards, all are substantially the same as an existing Mastercard offering.
dennis
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ah!
ill bet world elite mc will go with vipdesk then. and the $400 level card will keep its top level vipdesk.
and the higher level will be like ultima. not sure how theyll improve concierge with it.
and ive seen ultima cards elsewhere mention being able to transfer points to FFPs.
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Citi offers three cards that meet or approach the requirements for Mastercard World Elite: Carte Blanche, Diners Club and Chairman. Inasmuch as this platform will extract higher merchant fees I would expect all three to be migrated.
I would not be surprised to see an American Express version of Chairman card, but I wouldn't expect it to replace the Mastercard product. Look at Citi's other American Express cards, all are substantially the same as an existing Mastercard offering.
dennis
I agree, I think the Chairman card will be reintroduced on the World Elite platform. Moreover, I guess there will only be minor changes to the current Chairman Card. I think the most significant change will be with the current exceptional Priority Pass privileges. I suspect the Priority Pass will change to allowing only the cardholder for free and charge for any additional guests. This generous allowance of two free guests has to be expensive for Citi.
My opinion, I do not think the Chairman Card will be introduced as an AmEx. The Chairman Card is a flagship product for Citi and their ties are much much stronger with MasterCard. MasterCard needs Citi's Chairman Card as they attempt to go more upscale in hopes of surpassing AmEx and Visa in affluent customers. I imagine MasterCard helps Citi with the Chairman Card (e.g. logo on the back) and in return Citi pledges their allegiance to MasterCard.
However, I cannot understand introducing the World Elite with HSBC.
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I agree, I think the Chairman card will be reintroduced on the World Elite platform. Moreover, I guess there will only be minor changes to the current Chairman Card. I think the most significant change will be with the current exceptional Priority Pass privileges. I suspect the Priority Pass will change to allowing only the cardholder for free and charge for any additional guests. This generous allowance of two free guests has to be expensive for Citi.
My opinion, I do not think the Chairman Card will be introduced as an AmEx. The Chairman Card is a flagship product for Citi and their ties are much much stronger with MasterCard. MasterCard needs Citi's Chairman Card as they attempt to go more upscale in hopes of surpassing AmEx and Visa in affluent customers. I imagine MasterCard helps Citi with the Chairman Card (e.g. logo on the back) and in return Citi pledges their allegiance to MasterCard.
However, I cannot understand introducing the World Elite with HSBC.
Its a Saks branded card issued by HSBC. I agree. Its strange that Saks/HSBC would be the first on the World Elite platform.
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I agree, I think the Chairman card will be reintroduced on the World Elite platform. Moreover, I guess there will only be minor changes to the current Chairman Card. I think the most significant change will be with the current exceptional Priority Pass privileges. I suspect the Priority Pass will change to allowing only the cardholder for free and charge for any additional guests. This generous allowance of two free guests has to be expensive for Citi.
I seriously doubt that Citi will lower any of the benfits on the current Chairman Card. n A lot of cardholders would be pissed off and would cancel their cards thereby tarnishing the Chaimrman name.
My opinion, I do not think the Chairman Card will be introduced as an AmEx. The Chairman Card is a flagship product for Citi and their ties are much much stronger with MasterCard. MasterCard needs Citi's Chairman Card as they attempt to go more upscale in hopes of surpassing AmEx and Visa in affluent customers. I imagine MasterCard helps Citi with the Chairman Card (e.g. logo on the back) and in return Citi pledges their allegiance to MasterCard.
However, I cannot understand introducing the World Elite with HSBC.
It will be another version of the Chairman Card but with more benefits at a higher price for the new members. Members as of Sept 15 will be grandfathered in at the old rate.....me thinks....
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I think the most significant change will be with the current exceptional Priority Pass privileges. I suspect the Priority Pass will change to allowing only the cardholder for free and charge for any additional guests. This generous allowance of two free guests has to be expensive for Citi.
I spoke to a CSR manager about this a week ago and he mentioned that the Priority Pass will be going further up. He mentioned that additional card holders will able to get a Priority Pass also. He didn't mention if they would be able to bring guests in though. He said that they were doing this because of the large response that they got from clients who kept mentioning that lounge access was available with competing cards. This also applied to the Hilton Gold level.
- SR
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the new top card is going to be like ultima. that's a MC right?
anaggie, when AMEX came out with centurion they didnt upgrade Plat holders for free. its a whole different level of card :P
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anaggie, when AMEX came out with centurion they didnt upgrade Plat holders for free. its a whole different level of card :P
Understand...I meant to say that if you are already holding a Chairman card, they will offer you the higher level at the same price and when your membership dues come calling, they will charge you th higher rate....
For me...I just paid this years dues for 400 -- but when the card comes out next qtr....I can be upgraded without paying anything, and come Sept 07, I will have to pay the new fee...
I think they want to give everyone a taste of the new card and then hopefully you will pay the fee when it comes down to it...
kinda of like getting an op-up when it is least expected so that you can taste what C/J or F is like...and then hopefully tyr to buy tickets to fly C/J...
happened to me at Skylofts...now next time I go to Vegas...I will seriously consider SKYLOFTS....
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Does anyone have a copy of the old application that can be emailed or faxed or PM'd to me? Help would be appreciated. Thanks.
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Charter Members of Amex Centurion got grandfathered in at the original $1000 annual fee w/ $500 aditional cards....
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Charter Members of Amex Centurion got grandfathered in at the original $1000 annual fee w/ $500 aditional cards....
again to clarify, that is different.
centurion > centurion
NOT platinum > centurion.
which would be the equivalent here, $400 > $1000 card.
i see what youre saying now anaggie, still not sure its very likely though. if they do a good job with this card, it will sell itself and be HIGHLY competitive to centurion. im really hoping they do.
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again to clarify, that is different.
centurion > centurion
NOT platinum > centurion.
which would be the equivalent here, $400 > $1000 card.
i see what youre saying now anaggie, still not sure its very likely though. if they do a good job with this card, it will sell itself and be HIGHLY competitive to centurion. im really hoping they do.
Kagehitokiri, what are you saying here? :confused:
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american express did not give platinum cardholders a free centurion card for any amount of time... that is why i cannot seeing citi doing the equivalent.
especially if the card is amazing, and better than centurion. they wouldnt need to.
edit - AH! i was about to say there is no logical connection. but i think i see where people are coming from now. my platinum vs centurion example doesnt really fit exactly either. because both cards are going to be new, and isnt it being suggested by citi that the chairman card name will be attached to the new card, and there will be a new name for the $400 card?
i apologize for suggesting my example was more representative. that probably suggests there is a fair chance of some kind of value being given to current cardholders.
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american express did not give platinum cardholders a free centurion card for any amount of time... that is why i cannot seeing citi doing the equivalent.
especially if the card is amazing, and better than centurion. they wouldnt need to.
Hello Kagehitokiri,
I agree that Amex did not give platinum cardholders a free centurion card for any amount of time. The issue here is different. I would say that the comparison would be closer to the Charter Centurion cardholders being grandfathered into the current Centurion cards. They did not have to go through the application process again, pay the new fee structure, etc.
I would guess that Citi would do the same for existing Chairman members simply because there are not many of us right now and the impact of having the few of us pay an additional fee will not make up for the bad publicity/blood that not grandfathering us generate. Charter Centurion cardholders are amongst the cards most loyal fans.
Citi needs those types of people to trumpet the new card.
Also, I don't think that there will be a new $400 card. I think that there will only by the $1000+ Chairman card, just like there was no $1000 Amex when the $2500 Centurion came out.
Just my two cents.
- SR
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citi has said there is going to be a $400 level card..
why wouldnt they have one?? that would be a huge mistake. amex doesnt JUST have centurion it has platinum.
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Hello Kagehitokiri,
I agree that Amex did not give platinum cardholders a free centurion card for any amount of time. The issue here is different. I would say that the comparison would be closer to the Charter Centurion cardholders being grandfathered into the current Centurion cards. They did not have to go through the application process again, pay the new fee structure, etc.
I would guess that Citi would do the same for existing Chairman members simply because there are not many of us right now and the impact of having the few of us pay an additional fee will not make up for the bad publicity/blood that not grandfathering us generate. Charter Centurion cardholders are amongst the cards most loyal fans.
Citi needs those types of people to trumpet the new card.
Also, I don't think that there will be a new $400 card. I think that there will only by the $1000+ Chairman card, just like there was no $1000 Amex when the $2500 Centurion came out.
Just my two cents.
- SR
How many Chairman Card accounts did Citibank issue?
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Anyone hear if they will still waive the fee for Smith Barney clients?
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Hello Kagehitokiri,
I agree that Amex did not give platinum cardholders a free centurion card for any amount of time. The issue here is different. I would say that the comparison would be closer to the Charter Centurion cardholders being grandfathered into the current Centurion cards. They did not have to go through the application process again, pay the new fee structure, etc.
I would guess that Citi would do the same for existing Chairman members simply because there are not many of us right now and the impact of having the few of us pay an additional fee will not make up for the bad publicity/blood that not grandfathering us generate. Charter Centurion cardholders are amongst the cards most loyal fans.
Citi needs those types of people to trumpet the new card.
Also, I don't think that there will be a new $400 card. I think that there will only by the $1000+ Chairman card, just like there was no $1000 Amex when the $2500 Centurion came out.
Just my two cents.
- SR
I have been given different information by various CSR people at Chairman Card. The consenus seems to be the current account would remain status quo and a new acount (which current members may upgrade to) would come out with new beneifts and an annual fee of 4-5 times the current. It appears they are attempting to compete with Centurion heads on. With the current state of the centurion program being so poor, I am very excited!
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i havent seen anything on FT suggesting anything different from the above post..
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Im not sure if this is the card in refrence, but i believe it is new....i could be wrong though.
http://www.citibank.com/us/cards/cardserv/amex/platinum-amex.jsp
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The Citi American Express Platinum card is not "new", it is one of the cards mentioned in the original rollout of Citi American Express cards...
http://home3.americanexpress.com/corp/pc/2005/citi_cards.asp
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I have been given different information by various CSR people at Chairman Card. The consenus seems to be the current account would remain status quo and a new acount (which current members may upgrade to) would come out with new beneifts and an annual fee of 4-5 times the current. It appears they are attempting to compete with Centurion heads on. With the current state of the centurion program being so poor, I am very excited!
Maybe true, but why would they stop accepting applications for the current Chairman Card if they are only adding another tier. That doesn't make sense unless they are going to replace it. American Express didn't stop applications for the Platinum Card when they were rolling out the Centurion.
I haven't called CSR and didn't know about this until I read it on Flyertalk, but I suspect we will all just be rolled into the new program. Or maybe Chairman will exist, but no new applications will be accepted... similar to the old Carte Blanche Card.
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I need a copy of a chairman's card application.
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Just spoke with Chairman CS and asked a bunch of questions around the new card to see what answers I'd get. Here are the highpoints:
Citi is no longer issuing the present Chairman card to new applicants.
The new Chairman card will be Amex-branded and available Q1 2007.
Current Chairman card holders will be offered the new card for $400 for the first year and after that the fee will rise to the new annual fee (according to the CSR not presently set but from the words he used would appear to be much higher)
Current Chairman card holders that do not want to switch to the new card will be able to use the existing card at least through the expiration date (the CSR also mentioned that in the past when Citi has discontinued a card, they sometimes make a decision to let existing card members continue to use that card going forward)
Benefits on the new card have not been set but would be of a type and nature that would justify the additional fee.
The most intriguing thing as I've thought through all this is that Amex would allow a branded product that might canabilize their Centurion business. All in all, I'm looking forward to seeing what the new card will bring in terms of benefits.
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The new Chairman card will be Amex-branded and available Q1 2007.
That is a bit sad (for me anyway). One of the reasons that I got the Chairman Card was to move away from Amex. I have turned down the Cent card from Amex in the past since the value prop just wasn't there for me.
This new Chairman Amex would have to pretty amazing in order for me to be interested in it.
I already have my Plat Amex that I use only when mastercard isn't accepted, so now I would need to find another card to replace it. I guess I might try the World Elite product.
I will miss the Chairman Mastercard product though.
I wonder if it would be possible to have both the current Chairman Card and the new one at the same time. That might be something that I would be interested in.
- SR
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Your comments about value proposition are interesting. Hypothetically, if Citi managed to create a new Chairman card that had at least Centurion-like benefits but a price point of say $1,000 instead of $2,500, I would imagine the value proposition would be sufficient enough that they would get quite a few applicants.
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great news for current holders.
but bizarre to go with amex.. ultima is mastercard isn't it?
and being an amex credit card means $100K limit doesnt it?? that's a fairly large deterrent...
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Your comments about value proposition are interesting. Hypothetically, if Citi managed to create a new Chairman card that had at least Centurion-like benefits but a price point of say $1,000 instead of $2,500, I would imagine the value proposition would be sufficient enough that they would get quite a few applicants.
Hello,
A price point of 1K and similar benefits would be fine. I can't see what would be in it for Amex though since that would basically mean a discounted Centurion.
At the same time though, I'd much rather have the Amex / Mastercard, or Amex / Visa combo instead of two Amex cards. If the new card is going to be an Amex, I will end up dropping either it or my current Amex.
- SR
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I do not think that it will be AMEX branded product....Citi would lose a lot of customers if they do that since a lot of places do nto accept AMEX....
CSR's do not really know what is going on...they are as much in the dark as we are...
"Loose lips sink ships"
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Hello,
A price point of 1K and similar benefits would be fine. I can't see what would be in it for Amex though since that would basically mean a discounted Centurion.
At the same time though, I'd much rather have the Amex / Mastercard, or Amex / Visa combo instead of two Amex cards. If the new card is going to be an Amex, I will end up dropping either it or my current Amex.
- SR
I'm quite surprised as well. I was going to drop my amex platinum card because the chairman seemed the way to go. I, for one, am very unlikely to shell out 1k for a credit card. The reason I paid for the chairman was pretty much for the priority pass. The extra $600 means that I will have to get substantial value out of the Chairman to keep it.
I do have to admit that I applied on the last day for the chairman card because I thought they might grandfather the $400 people in and it was worth taking the risk.
I do not think TY program comes close to SPG for value for $ spend, so I will continue to put the bulk of my purchases on my SPG Amex until Citi figures out what they are doing with this card.
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Just got off the phone with 2 different CSR's --
1) It will be an AMEX branded product
2) Existing members will not be forced to move over .. they can keep the card as long as they want it...Citi will not accept new apps for Chairman but will keep it going for the customer they already have...
So, it looks like if the AMEX branded card is woth it then I will switch if you get the flight points...if you do not, then you 2 choices:
1) Force citi to give you the elite level card without a fee..
2) Or keep the Chairman...
let us see what the benefits are going to be...
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Is the new card going to be called the chairman?
Is it (the new card) going to be by invitation only?
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Just got off the phone with 2 different CSR's --
1) It will be an AMEX branded product
2) Existing members will not be forced to move over .. they can keep the card as long as they want it...Citi will not accept new apps for Chairman but will keep it going for the customer they already have...
So, it looks like if the AMEX branded card is woth it then I will switch if you get the flight points...if you do not, then you 2 choices:
1) Force citi to give you the elite level card without a fee..
2) Or keep the Chairman...
let us see what the benefits are going to be...
Hello anaggie,
That is too bad. Since it seems that the new Chairman card ("v2") will basically be a discounted Amex Cent, I guess I'll see if I can get both the v2 and keep the current Chairman card ("v1") also.
In which case I will drop my Amex Plat and transfer my MR points.
I just don't see what is in it for Amex. I would think that a number of Amex Cent members would jump ship to the v2.
- SR
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Hello anaggie,
That is too bad. Since it seems that the new Chairman card ("v2") will basically be a discounted Amex Cent, I guess I'll see if I can get both the v2 and keep the current Chairman card ("v1") also.
In which case I will drop my Amex Plat and transfer my MR points.
I just don't see what is in it for Amex. I would think that a number of Amex Cent members would jump ship to the v2.
- SR
My main concern is the flight points...because without those...I would have a hell of a lot less points...
if it is same as the Chairman, but comes with elite status on a few airlines....or just AA....and a few hotel elite status like SPG...I am "golden'
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What are the best benefits of the Chairman Card?
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What are the best benefits of the Chairman Card?
there is a complete thread for this question....
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I got the Chairman Card a few months ago and love it. I would be happy to just keep it like it was. I already have Amex cards as well and don't like the idea of it changing over. It's nice to have the MC since it's more widely accepted and can be used for certain hotel promotions (Hyatt's Faster Free Nights) that Amex cannot. I wonder if Citibank had to change or if they tried to get any feedback from Chairman cardholders. It seems like a lot of people don't want to see it become an Amex.
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but again, an amex credit card would have no more than $100K credit limit right?
the chairman card has a spending limit doesnt it??
i cant see this card surviving if it has a credit limit like that. to a certain degree, the whole point of amex charge cards, and cards like world mc, visa sig/infinite and mc ultima is the spending limit vs credit limit.
amex wouldnt let citi issue a charge card would they?
this has certainly gotten a LOT more interesting, and im not sure in a good way.
maybe something happened between mc and citi? and citi wants to move everything to amex now? (over time) i cant think of ANY other reason for switching from mc to amex for this new ultima equivalent.
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but again, an amex credit card would have no more than $100K credit limit right?
Credit/charge limits are set by the issuing institution, I believe
amex wouldnt let citi issue a charge card would they?
With the positive outcome of the antitrust lawsuit some time ago, Amex's new focus has become volume. Profitability is determined by Margin x Volume; Amex has effectively reached a maximum on margin (retailers won't pay any more and the market is limited for 'premium' cards) and with banks now able to issue Amex brand products, their concentration is volume. I personally feel this leads to significant brand dilution, but that is another post entirely...
maybe something happened between mc and citi? and citi wants to move everything to amex now? (over time) i cant think of ANY other reason for switching from mc to amex for this new ultima equivalent.
I don't think anything "happened," it is a simple business decision because Amex offers banks a bit more of margin; all of the banks are doing it.
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thank you. excuse my ignorance...
so citi can maintain the same spending limit as the current chairman card.
i hadnt thought about the higher margin.
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For all we know the new product may be a charge card with no revolving credit line. Citi has the infrastructure in place and made it work with Mastercard (Diners Club), surely they could do it with American Express who also issues charge cards.
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For all we know the new product may be a charge card with no revolving credit line. Citi has the infrastructure in place and made it work with Mastercard (Diners Club), surely they could do it with American Express who also issues charge cards.
I just spoke with the Chairman CSRs again. I was told:
1. We will find out in Q1
2. Their VPs, etc are testing the new card now
3. They were not told that there will be two cards i.e. a Chairman Card and an Ultima/whatever
4. They were not told that it would be an AMEX card.
5. They were only told that the card was being enhanced. This could mean anything since "enhanced" is in the eye of the beholder, i.e. Citi vs. the consumer. Marketing teams always tell consumers that new products are enhanced. That just means that it has changed usually to be more attractive to the next target market segments and/or higher margin. That is a Jedi mind-trick to make you want the latest "whatchamacallit". We will have to see if it is better or worse and how much it will cost. Frankly I have not seen a single Citi card recently that has enhanced benefits for the consumer. Look at the recent track record of Citi, et al
- Diners Club
- Citi Dividend
- AMEX double everyday points
- ML+
All were "enhanced" to make more money for the issuer and provide less benefits for the consumer.
Citi has issued quite a few of those pretty little black cards, i.e. over 10,000 according to one CSR. It may be time for some additional perks like enhanced web-based account access, complimentary membership in the exclusive online retail club chairman.amazon.com, a discount on Chairman branded glassware, a color matched black payment tag, and a glow in the dark caption that says "my black card is better than your black card" . This will offset the changes that place a minimum cost on tickets that earn flight points, a change that only matches flight points with base purchase points, and limits points to 125,000 per year.
On the other hand, they could give full benefits to additional card holders, elite status on American Airlines, 3 nights for the price of 2 at Conrad Hotels, free upgrades at the W=A with breakfast at Oscars, exclusive parties in LA and NYC for card holders and their admirers, lapel pins, and a secret handshake all for $899.95....all on the new Citi Discover Card platform.
Ah, speculation...
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has anyone asked to confirm if its going to be the US equivalent of ultima?
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has anyone asked to confirm if its going to be the US equivalent of ultima?
You are really into ultima, so where is a link to this non-us cards benefits?
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You are really into ultima, so where is a link to this non-us cards benefits?
thats my point, there isn't one... it seems logical, that if citi already has a $1000 level centurion competitive card in other countries, then the card that is being launched in USA next year is going at LEAST be similar.
hence my earlier suggestion for someone in UK (or other country that has it) to call and ask citi. all the discussion on FT i've read regarding ultima has been about information released online (primarily regarding signup incentives)
just called the chairman number. asked "is the new card going to be equivalent to ultima?" response was something along the lines of "no details have been released, and im also eager to learn more"
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thats my point, there isn't one... it seems logical, that if citi already has a $1000 level centurion competitive card in other countries, then the card that is being launched in USA next year is going at LEAST be similar.
hence my earlier suggestion for someone in UK (or other country that has it) to call and ask citi. all the discussion on FT i've read regarding ultima has been about information released online, especially regarding signup bonuses.
just called the chairman number. asked "is the new card going to be equivalent to ultima?" response was something along the lines of "no details have been released, and im also eager to learn more"
I was just teasing :)
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i clarified who i was responding to in my last post.
i did recognize your sarcasm awake_at_midnight :)
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Citi has issued quite a few of those pretty little black cards, i.e. over 10,000 according to one CSR. It may be time for some additional perks like enhanced web-based account access, complimentary membership in the exclusive online retail club chairman.amazon.com, a discount on Chairman branded glassware, a color matched black payment tag, and a glow in the dark caption that says "my black card is better than your black card" . This will offset the changes that place a minimum cost on tickets that earn flight points, a change that only matches flight points with base purchase points, and limits points to 125,000 per year.
On the other hand, they could give full benefits to additional card holders, elite status on American Airlines, 3 nights for the price of 2 at Conrad Hotels, free upgrades at the W=A with breakfast at Oscars, exclusive parties in LA and NYC for card holders and their admirers, lapel pins, and a secret handshake all for $899.95....all on the new Citi Discover Card platform.
Ah, speculation...
We are all speculating here and no one knows. More importantly, I am convinced the CSR's know as much as we do about the new card--nothing. I believe the ideas about AmEx, increased benefits, etc. that have been heard from CSR's are speculation. I think the Chairman Card will stay on the MasterCard network and will change to World Elite. Simply changing to the World Elite platform would qualify as an "enhancement" according to Citi. Also, this will likely give more benefits to additional cardholders such as access to airport lounges, but additional cardholders would have to pay for each visit as suggested by the generic information known about World Elite.
I agree with "awake_at_midnight." I think we will see things like maybe a luggage tag, maybe a payment tag, a Chairman Card branded concierge website, access to a website like the new AAdvantage Private Pass Program with Exclusive Cardmember-Only Experiences and Access, etc. Also, I agree with "awake_at_midnight" that there will be some type of limit or cap on "Select Spend Points" and "Flight Points." I think this adjustment will help Citi pay for the new "enhancements" and the annual fee will stay at $400.
How many days until Q1/2007...?
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<< ideas about AmEx, increased benefits, etc. that have been heard from CSR's are speculation>>
Except if you reread the very first message in this discussion you will see that the original poster was told by a Smith Barney financial adviser that the in house memo announcing the product said it would be an American Express product.
Bear in mind that Chairman Card originated as an "exclusive" product for Smith Barney clients then opened up, perhaps because Citi realized they aimed too low. There are any number of reasons they might choose to use American Express for the second attempt.
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Why would they change anything if they are not going to have both a $400 card and a $1000 card?
They already compete with AMEX Plat, they want to compete with Cent in the USA.
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Why would they change anything if they are not going to have both a $400 card and a $1000 card?
They already compete with AMEX Plat, they want to compete with Cent in the USA.
Enhancements are not always in our favor. I'll bet they are working on "enhancing" the rewards program to provide a better value to their shareholders. It has been of great benefit to me. In fact, it is more than competitive with every other reward card. Where else can you get 6:1 points per $.
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Ultima has some kind of additional benefits. Why would they have a Centurion competitor outside the USA and not inside the USA?
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[QUOTE=mia]<< ideas about AmEx, increased benefits, etc. that have been heard from CSR's are speculation>>
Except if you reread the very first message in this discussion you will see that the original poster was told by a Smith Barney financial adviser that the in house memo announcing the product said it would be an American Express product.
QUOTE]
That's correct, Mia. My SB Financial Advisor read the memo to me - and there was no question that the new card is in partnership with Amex. I did ask if it would be branded Amex, or remain M/C. neither of us could really tell by re-reading the memo.
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The other option to this is that Amex would use the partnership to have access to MC, that would be a switch! Amex issuing MC.... hmmmm
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That does not make sense at all. Amex is now able to charge a premium over all other issuers and gets away with it.
Why would they lower their take by issuing a mastercard? They do not seem to be hurting for membership enough to do this move..
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Just got off the phone with a CSR. I called to ask about the new card. she said "I'm not allowed to talk about it." WTF? Has anyone else had a similar encounter?
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Enhancements are not always in our favor. I'll bet they are working on "enhancing" the rewards program to provide a better value to their shareholders. It has been of great benefit to me. In fact, it is more than competitive with every other reward card. Where else can you get 6:1 points per $.
The Chairman card is very feature packed and very reasonably priced if you are interested in airline lounges. Rewards program is very generous. They could be changing to AMEX because of the higher merchant fees which would help offset the cost of the program. This option wasn't available to them when Chairman first started.
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The Chairman card is very feature packed and very reasonably priced if you are interested in airline lounges. Rewards program is very generous. They could be changing to AMEX because of the higher merchant fees which would help offset the cost of the program. This option wasn't available to them when Chairman first started.
Then why allow people to keep their current chairman cards?
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There has got to be a new $400 card.. I would presume it's fairly similar to current card. I would hope VIPDesk stays attached to both, and the $1000 card has an additional concierge service.
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The Chairman card is very feature packed and very reasonably priced if you are interested in airline lounges. Rewards program is very generous. They could be changing to AMEX because of the higher merchant fees which would help offset the cost of the program. This option wasn't available to them when Chairman first started.
That makes alot of sense... I'll bet Chairman Card holders charge alot more than the average Citi cardholder. It would make sense to put it on the AMEX platform. I am willing to bet that the new WorldElite platform probably has higher exchange fees. However, I do not know which is higher.
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That makes alot of sense... I'll bet Chairman Card holders charge alot more than the average Citi cardholder. It would make sense to put it on the AMEX platform. I am willing to bet that the new WorldElite platform probably has higher exchange fees. However, I do not know which is higher.
No it would not make sense to put it on the amex platform. I use the chairman where amex is not accepted. If it was an amex, I would stick with my current amex.
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The question is how many people are like drbond. On FT, it's a fair number.
In my opinion, this is another reason to suggest a high benefit level.
They are not relying on being a different card. They are literally competing directly with AMEX.
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I think they will stick with MC. Citibank is the largest issuer of Mastercard's and I doubt they would put such a strong product of theirs (Chairman) on a secondary platform and effectivley reduce its usage by customers since it could be on the AMEX network with a lower acceptance rate.
I think they will introduce a World Elite version of the Chairman Card. The MC World Elite press release implied that other institutions will bring their own World Elite version online through 2007.
Though I am not sure if they will keep the current version Chairman and issue World Elite versions as well or force customers to move to the new level World Elite and phase out the current level of Chairman (World) ---or better yet, do not issue the current version any longer and give an incentive for those that have the current Chairman that wish to have the new version.
There was a rumour that Priorty Pass will be improved to include all authorised user on the Chairman account whereby they each would be issued thier own Priority Pass--this would be welcome by me. Also that they might seperate charges out on different pages for authorised users--that would be better too.
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the chairman card has a spending limit doesnt it??
i cant see this card surviving if it has a credit limit like that. to a certain degree, the whole point of amex charge cards, and cards like world mc, visa sig/infinite and mc ultima is the spending limit vs credit limit.
amex wouldnt let citi issue a charge card would they?
The Chairman Card doesn't have a spending limit—it has a credit line that you can exceed in an Amex-like fashion. (Assuming Amex ever actually approves purchases over the hidden charge card limit, which is dubious. I've seen people post of being about to exceed their Citi line by at least 2x.)
But to actually answer your question, I just noticed that the Citi AAdvantage Amex card appears to work just like the other no preset limit Citi products such as the Chairman Card. So Citi could certainly re-brand it as an Amex without a preset limit, other than the "soft" limit of the revolving credit line.
I agree with the general consensus that it is unlikely to become an Amex though. I suspect that the current card will remain a World MasterCard and the new card will be a World Elite.
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The Chairman Card doesn't have a spending limit—it has a credit line that you can exceed in an Amex-like fashion. (Assuming Amex ever actually approves purchases over the hidden charge card limit, which is dubious. I've seen people post of being about to exceed their Citi line by at least 2x.)
I agree with the general consensus that it is unlikely to become an Amex though. I suspect that the current card will remain a World MasterCard and the new card will be a World Elite.
I agree with you.... I highly doubt that the best product in the history of Citi has the Chairman card paired with MC ...I doubt that would leave the pairing and go with AMEX -- a direct competitor -- also how do you make any sense of the fact that Amex would cannabilize the Centurion with a Chairman (v2)....makes absolute no business sense...
I also think that a lot of Chairman customer got away from Amex...now if Citi goes back to Amex, then very few people would sign up for that card...
If citi goes to Amex for their best card, I will get it only if the flight points are still available...if not then I prefer to keep the current Chairman Card...
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I think the fact that American Express also issues its own cards is a minor consideration in choosing the network for Chairman card. This product isn't really about transaction fees, but rather about client relationship management. It appears Citigroup created Chairman card to attract and retain clients for Smith Barney. Citi makes serious money from issuing Mastercards to people who carry balances and pay twenty-something percent interest. The Chairman card will never generate that type of margin. Instead it will serve as a tool to tie clients to Smith Barney and give Citi information about their spending patterns. which they can use for additional marketing.
American Express has been doing this same sort of thing for decades. American Express no longer competes with Smith Barney. I do not see any reason Citi would not move the card to the American Express network if it is the best fit for their objective.
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The Chairman Card doesn't have a spending limit—it has a credit line that you can exceed in an Amex-like fashion. (Assuming Amex ever actually approves purchases over the hidden charge card limit, which is dubious.----.
The Chairman Card has a credit limit for revolving credit and a credit guide line that can be used in excess of the credit limit which must be paid in full monthly.
The amex cards come in both a credit card that has a credit limit that cannot be exceeded and also a charge card that has a credit guide line that must be paid in full monthly. There is not a combined charge/credit card available from amex at this time. The charge limit is not hidden and you can ask what it is and negotiate its increase. Mine started at 5k and has been increased over the years to around 120k, irregardless I would not charge that much and pay it off in full at the end of the month, unless it was a business purchase and provided a LOT of points.
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The amex cards come in both a credit card that has a credit limit that cannot be exceeded and also a charge card that has a credit guide line that must be paid in full monthly. There is not a combined charge/credit card available from amex at this time. The charge limit is not hidden and you can ask what it is and negotiate its increase.
Right; I do rather like Citi's method of having a visible credit limit in addition to the "credit guide." Since regular Amex CSRs cannot tell me what the limit is on a charge card (and deny that such a thing exists), I consider the limit to be hidden. Account Services will confirm that there is a hard limit and the amount of the limit. Nor would they negotiate an increase on a new Gold Rewards Plus charge card with a horribly low limit (despite having about 25 times that amount in combined available credit on various Amex credit card products, which I was happy to have reduced if they could increase the limit on the GRP.) I was told the only thing I could do was wait 6 months and the limit would "probably double" after some activity, and continue to do so in the future—it more than doubled after around 3 months.
Anyways, this is kind of off-topic and I've complained about it at length multiple times in the Amex forum so I'll be succinct... So, Amex lets you reallocate credit lines between credit card products but not with a charge card product, and Amex will issue larger credit lines at first then issue cards with smaller credit limits once you have several cards with large credit limits. Let's say you're an Amex customer with good credit and apply for 4 new cards over a few months. Amex decides that they will give you $25k, $25k, $10k, and $5k limits on these cards in that sequence. (I believe that Amex will not provide a limit of over $25k on a new credit card without submitting financial documentation. You can reallocate credit to a card and take it past $25k easily enough, but I've gotten the feeling that you're setting yourself up for a financial review by doing this.)
Example 1: The first card is a charge card, the last 3 are credit cards. You now have a charge card with a $25k "limit" and 3 credit cards with $40k in limits that you can shuffle around as you like.
Example 2: The first 3 cards are credit cards, the last one is a charge card. You now have a charge card with a $5k limit that cannot be increased immediately, so you can't spend more than $5k in a 2 month period unless you feel like paying the card off early. Several months later the limit will perhaps go up. You have $60k to shuffle around amongst the credit cards, but it sure would be nice if some of that could go to the charge card!
I know I'm making some assumptions here, but based on my experiences I'm fairly certain this is one piece of how Amex assigns new card limits. I have quite a few Amex cards between personal and small business, and after the first half dozen or so noticed progressively lower limits on new cards. The new GRP came with a limit that was roughly equal to a couple of Amex credit card products I'd applied for around the same time. Older charge cards and credit cards both came with much higher initial limits when I had far less open credit with Amex.
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Today rep told me they were switching to amex and reducing the forex. bad - good.
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OK...this is all just rumours...
NONE of the CSR's know what the card is because the information is not out yet...
I talked to a CSR swho actually signed me up over the phone a yr ago and I have developed a very good realtionship with him over the past year, so I asked him to give me the "Real Deal"...He says that not one CSR has any info and what everyone is hearing is PURE RUMOURS !!!!
Nothing is in stone yet..He says that he will call me as soon as he gets any more info...He will call because he has done so before...and is true to his word...when he will call is something different...
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American Express no longer competes with Smith Barney.
But Ameriprise does compete with with Smith Barney.
Yeah, I know now two 'seprate' companies.
Meanwhile Ameriprise still give a fee free Amex Plat card at $500,000 in brokerage assets and a free gold card at $100,000.
Also on the AMEX website is a tie in for 7500 M.R. points for meeting the the surfer new generation of financial advisors over at a 'seprate' company Ameriprise.
Dennis, so you have any thoughts on Amex doing something that aids Smith Barney and puts Ameriprise at a compeitive disadvantage?
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American Express and Ameriprise are separate companies. Inasmuch as Amerprise was only recently spun off from from American Express the relationship is still in transition, for example there are links to Amerprise on the American Express home page, Amerprise offers Membership Rewards points and features American Express cards.
These are superficial resemblances. Fidelity also issues American Express cards that earn Membership Rewards, as does HSBC's international bank. Guaranty Bank (TX) offers a checking account that earn Membership Rewards points, and they feature an American Express Gold card with their logo on it and push American Express gift cards. USB's private bank has a two card Amex/VISA program operated for them by Barclays's Juniper division. Bank of America's private bank will also issue a high end American Express card. Etc, etc, etc.
It seems evident that American Express aims to partner with many financial institutions and is positioning itself as the high end card network based on their higher merchant fee structure. This must be well known to Ameriprise. American Express managers have no stake it Amerprise's financial results. I don't see American Express' relationship with Ameriprise limiting their ability to provide card services to Smith Barney or anyone else. Remember, Smith Barney won't make nearly as much money from card activity as they will from managing the clients investment accounts. The card is just a tool to attract and retain clients, and I daresay most of us Flyertalk posters are not in the target demographic ;) .
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The card is just a tool to attract and retain clients, ;) .
Gee, I hope this is true.
You describe, in my interpetation, a "loss leader" premium card where the benefits far outweigh the fee. A marketing tool for SB.
Chairman has a l-o-ng- way to go before the benefts and hype exceed or even equal the fee.
I watched this card with a yawn for six months before pulling the trigger in September.
Prior to reading that apps would be stop and this card would be the high net worth businessperson's answer to the gangster rap drug dealing brintney spears centurion, I thought very little of chairman.
After dealing with Citi customer service, I think even less.
http://www.flyertalk.com/forum/showthread.php?t=422413&page=10
( see the last few posts on the thread - "What happens when you are Citigold."
Citi only wanted $1500 from me. $100,000 was unacceptable).
I don't think Citi marketing has it in then to create a product that charges a fee of $1000+ and delivers more $1000+ in value and benefits.
And if it finally figures it out in three years after we pay 3 years of fees ,
who is to say that they won't cull the rolls of non SB clients?
Remember we are talking about Citi.
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I think we need to change the way we think about American Express. They first tried to partner with banks in the 1980s, but were quickly locked out by an illegal agreement between Mastercard and VISA. It took twenty years to resolve, but American Express is now positioned to compete against Mastercard and VISA rather than against the banks that owned those networks.
Citibank's migration of Diners Club to Mastercard, and Morgan Stanley's decision to spinoff Discover, rationalizes the industry structure. There will be card networks (American Express, Discover, Mastercard, Visa), and there will be card issuers (American Express, Bank of America, Capital One, Chase, Citibank, etc). Only American Express will be both a network operator and a card issuer. To my knowledge neither Capital One nor Chase has agreed to issue American Express cards, but it appears Bank of America, Citibank, and many smaller issuers are comfortable working with American Express because they were released from liability in the Mastercard/VISA antitrust damages action and because American Express can offer higher transaction fees. I believe most banks are thinking of American Express more as a partner than a competitor, and certainly not as a threat to their high end banking businesses.
If the information posted in the other thread is accurate Chairman card will certainly not be a "loss leader", nor would I expect it to be. I think, however, that Citi will not repeat the mistake that American Express made basing Centurion eligibility on charge volume and will base it on investable assets.
<< cull the rolls of non SB clients?>>
I would, but then its hard for me to see why Citi opened Chairman Mastercard to individuals who are not Smith Barney clients. I can only think that they had so few Smith Barney cardholders that they couldn't really see how the customer service, concierge and travel services performed. The change in travel agencies may well be one result. However, I think Citibank has substantial work remaining if they intend Chairman card to be a compelling feature in choosing a bank. The benefits and rewards described in the other thread are unimaginative and pathetic.
dennis
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[snip]
Only American Express will be both a network operator and a card issuer.
[snip]Just as a point of fact, Discover will maintain a closed system, even after being spun off. It will both issue cards and own its network.
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<<Discover will maintain a closed system,>>
Quite true, and it's not the first mistake I've made this week :( .
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<<Discover will maintain a closed system,>>
Quite true, and it's not the first mistake I've made this week :( .Don't take it so hard :) you've got a much more informed perspective than most of us in this forum - appreciate your thoughts.
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It seems evident that American Express aims to partner with many financial institutions and is positioning itself as the high end card network based on their higher merchant fee structure.
.
I do note that years ago the comment about the higher merchant fee structure was much more applicable.
The gap between MC/VISA and Amex merchant fees has narrowed in recent years.
The non kids may recall a time when even in major U.S. cities that AX acceptance was much more limited than now. This was due to merchants refusing the higher fee structure. thus, AX HAD to do a lot of co-op advertising with restaurants to get them to take Amex. It was a partial 'rebate' in soft dollars to offset part of the higher cost. Now due to the narrower gap, AX needs to do a lot less CO-OP programs.
Also AX has grown away from it core CHARGE cards that don't earn high profit margins from INTREST charges.
Amex has a lot more transaction volume today on its CREDIT products than its CHARGE products. I can recall when the first AX credit product ( although sign & travel etc. was previously available on charge cards) was a singular plain vanilla Optima card-- no points ,no rewards etc,.-I think profits from intrest has subsidized a reduction in Merchant fees. AX wants their cards to now be universal and not exclusive.
So this being the case , how would this make AX the high end network.
In my personal opinion, not withstanding the original 1980's anti trust position, I think Amex takes a big long term risk when they license their trademark out for a small payment.
IT WILL TARNISH THE BRAND.
A VERY GOOD BRAND.
Bank of America is one of the worse major issuers on far as customer service
and predatory retroactive rate jacking.
https://wwwn.applyonlinenow.com/USCCapp/Ctl/entry?sc=FAASGJ&GV10=H|333|7619
(While I don't carry balances, most Americans do. that is the reality)
So when consumers get poor customer service from B of A , or their intrest rate is raised on a exsisting balance--currently legal but unethical in my view-- AMEX's CORPORATE AND BRAND IMAGE gets consumer bad will.
And for what?? A small licensing fee???
It is B of A than keeps the lucurative intrest charges on the AX portfolio's recievables.
Oh and regarding Jeremy Z comment of a month ago:
you've got a much more informed perspective than most of us in this forum - appreciate your thoughts.
DITTO!!
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There is not much that I can say here that has not already been covered. I will point out a few things which are not clear IMHO. Back in the early years the Merchant Fees were actually the same with both VI/MC and AX. Unfortunately for merchants that was 5% or more. They all had to use paper deposit slips in order to get reimbursed for their funds. So how did VI/MC advance so much faster than AX. The proceedure with those slips was part of it. With VI/MC you would take the charge slips and deposit them with your regular bank department just like checks and cash and the bank would credit your account. With the AX charges slips, you would mail them in and then wait for a check to be mailed to you. Funding was routinely over 30 days and was true for some bank/merchant relationships as well. However the banks quickly learned to credit via a loan like service in advance of actual settlement for the VI/MC transactions which AX could not do with its (mail them and wait for check) routine. This led to merchants preferring a VI/MC charge as they got their money faster and some even got a bad taste in their mouth with AX because sometimes the forms would get lost in the mail (imagine that) causing an even bigger delay. The merchants also had to call in for authorizations or check books that were sent to them. As technology came on the scene, terminals came into to play. The CC Issuers wanted merchants to use these terminals because they would be able to check instantly for bad cards (not the 2-6 month old information in the books that may or may not be checked) and would cut down on losses. These terminals cost money so they had to have an incentive to get merchants to use these. Some banks rented them and others sold them. It still wasn't getting them out there like they wanted so they started decreasing the deposit time and it soon got down to about a week. In the beginning you had to have a different terminal for AX for a short period and that was another drawback to the merchant. Then AX came out and started to offer deeply discounted or loaned terminals. And all this time they were all at 5% plus. So the next volley was to discount the discount rate and the transaction fees. And the wars began. 4% & $0.75, 3% & $0.50, etc... Soon VI/MC were both lower than AX and with AX being a charge product and not a credit product they had to have those fees to survive, so they quickly bottomed out and VI/MC had an edge. Merchants of today fail to remember the days when the rate was over 5% so they say "ax is too high" and really they are not. As the rate structure at AX is solely based on the discount percentage and not on the transaction and monthly fees. VI/MC are based on all three fees plus other fees on top of that. But that is a long story to try and tell here, so moving on. The other thing that hurt AX was the fact that in order to get the product into the hand of the merchant AX had to sell it just like VI and MC. So AX started with telemarketing campaigns. As you know merchants do not like a phone call trying to sell them anything when they are trying to deal with a customer and AX did not know when a customer was not there. Another negative on AX in the mind of the merchant. Then AX hired some sales agents to go out in the field and try to sell these merchants. Now obviously that would take a lot of time and they would never get to all of the merchants, so AX concentrated on select merchants and that hurt them as well. They did earn a reputation as the high end card as a result of their limitations. Now VI/MC both had the advantage of being offered by the local bank which meant that in every town no matter how large or small there were several salesman (ie bank employees) working for them selling their product. The merchant would deal with the bank employee on a daily basis and they built up a trust with the bank (albeit sometimes misplaced as banks are profit centers and a certain amount of brain washing goes on). Many merchant/owner/loan good ole boy relationships were forged giving a sort of iron fortress in the minds of many business owners that quickly pushed VI/MC ahead of AX to the point that AX fell way behind. In the mid 90's AX opened their product to the sell by an external sales agent force and that has helped to closed the gap a great deal. Now understand there are many other facets to this over the years that I have not mentioned and we are talking since the 60's so please don't think that this is the all and all of the story. But maybe it will shed additional light on the progression of how the three got devided so far.
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Please don't resort to such brevity in the future.
The least you could have done was taken the time to write a detailed reply.:D
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Please don't resort to such brevity in the future.
The least you could have done was taken the time to write a detailed reply.:D
Do you really want me to? :D
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The gap between MC/VISA and Amex merchant fees has narrowed in recent years.
So this being the case , how would this make AX the high end network.
You may be interested to read this FORTUNE article from April 2005.
http://money.cnn.com/magazines/fortune/fortune_archive/2005/04/18/8256988/index.htm
Relevant bits:
On average, American Express transaction fees are half a point higher than Mastercard or VISA (2.6% vs 2.1%). There is an explanation of how the 2.1% is divided "when you buy a $100 sweater ... $2.10 of that purchase goes to three parties: The bank that issued the card gets about $1.75; another bank that processes the transaction gets roughly 38 cents; and Visa gets roughly 2 cents ... Analysts say AmEx is cutting MBNA and Citi in on a bigger chunk of the action than they get from Visa or MasterCard--something it can do easily, since its merchant fees are so much higher". Do the arithmetic: $1.75 represents 83% of $2.10. If American Express allows Citibank or BoA to keep 83% of $2.60 that's $2.16, which VISA/Master cannot match because it exceeds the amount of their merchant fee.
"Last year the average AmEx customer rang up $7,618 in charges per card--about four times as much as the average Visa or MasterCard customer....To keep its elite image, AmEx wants to steal only the Visa and MasterCard customers who charge the most--about 10% of their customers"
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[QUOTE=mia;7072673]You may be interested to read this FORTUNE article from April 2005.
http://money.cnn.com/magazines/fortune/fortune_archive/2005/04/18/8256988/index.htm
Relevant bits:
On average, American Express transaction fees are half a point higher than Mastercard or VISA (2.6% vs 2.1%). QUOTE]
Sure they are higher, But I hold my ground that they have narrowed.
I have paid research access and will try to find a similar article fom the late 80's , early 90's to support my contention.
Also its important to note that not all merchants are treated equal.
The link 2 gov and Pay1040 websites that are so popular with FT'ers at tax time charge the consumer 2.49%. Obviously these two sites as well as others like American Airlines, Hilton Pay less than 2.6%.
If not the case than PAY1040 and link to gov would be losing on EVERY Amex transaction.
Would you at least agree that AX has more leeway to cut reductions for high volume partners as it has 100% of the fee to play with.
In this regard, Visa, MC are at a big disaadvantage to cut volume discounts to big merchants as that merchants processor only has one of the three parts to work with.
So yes, at mom & Pop sweater shop and little town usa ice cream shoppe 2.1 Vs 2.6 is not so narrow. But it is not as wide as 15-20 years ago.
DO YOU THINK THAT HUGE VOLUME MERCHANTS PAY HALF A POINT MORE IF THE CONSUMER USES AMEX?
Answer
There is an explanation of how the 2.1% is divided "when you buy a $100 sweater ... $2.10 of that purchase goes to three parties: The bank that issued the card gets about $1.75; another bank that processes the transaction gets roughly 38 cents; and Visa gets roughly 2 cents .
So, common logic would dictate that only 38 cents out of a $100 purchase is up for negotiation.
.038 is subject to negotiation and possible concessions.
Conversely, 2.60% is on the table for negotiation and concessions with AX.
Or stated another way, 100% of the AX fee can be adjusted if competitive pressures and dollar volume justify.
With V-MC only a scant 18% is in play. Joe's corner pizzeria and Macy's get the same terms on 82% of the merchant rate.
This in and of its self constitutes a 'real world' narrowing.
Answer
Two points that make all of this mute:
1. VI/MC rates are negotiable and range over 5% even today and they charge a transaction fee and account fee.
2. AX rates are mostly non-negotiable and there is no transaction fee or account fee except for non-standard businesses.
None of these references are comparing apples to apples because they don't have a knife to look inside the apple.