Credit card fees vary massively at established banks, according to a new study – an indication of the market challenger banks might be able to take a bit out of.
550 Swiss francs ($587): that's how much occasional credit card users can save in the first two years if they switch from one of the priciest providers to one of the cheapest, according to a study (in German) released on Wednesday by Moneyland. The online comparison portal looked at the cost and services of 163 credit cards in Switzerland.
According to Moneyland, frequent users can save as much as 1,150 francs by defecting. The massive price difference is a dead giveaway that the credit card market is ripe for disruption by a low-priced scale model. Neobanks in the Swiss market have thus far focused their resources on debit offerings, and not credit.
Defending Prices
The study's authors highlight neobank cards as vastly preferable to traditional finance for foreign transactions. The coronavirus crisis has upped the stakes for digitization: both UBS and Credit Suisse recently launched initiatives which can be read as counterattacks to online-only banks.
Moneyland highlights what is at stake for traditional banks: credit cards are lucrative, with income on foreign exchange transactions, late payments, interest, interchange, and other fees. They are also an integral part of pricey packaged solutions by banks – and represent a direct interface to clients that they are desperate to defend.
