Friday, August 5, 2011

The Google Credit Card

The Google (GOOG) credit card has arrived. No joke, this is the real deal people! So what’s the catch, right? The Google AdWords Credit Card has been designed for small-to-medium size businesses that already advertise on Google. The firm is now capitalizing on the fact that many of its advertising clients in one form or another are often cash flow constrained and lack a “formal” credit line. While we can’t say we were expecting to ever see a credit card from Google this just goes to show you how innovative and bold the firm remains after so long.
In these tough economic times credit only flows freely and or at reasonable rate to financial institutions more prestigious (AKA: lucrative) clients. With that being said it looks like Google has taken this rough reality and turned it into an amazing opportunity. The firm has now officially transformed itself from just being a tech giant to a large scale financial institutions of sorts as well. Anyone who had doubts on whether Google could truly break into non-tech industries won’t have much to say after this. This one move alone makes us rate Google a “buy” given that the firm has now launched a new revenue arm that leverages its immensely lucrative advertising client base and further increases its presence in the online transaction space.
Yes You Can Charge It!
A few years ago most would have seen this as a horrible idea for Google because credit flowed like water from a river. Today though credit is a precious commodity and Google intends to capitalize on this reality. Other big names such as Macy’s and have been doing this for years and reaped the benefits without question. For Google it makes complete sense as well given the amount of money it makes by charging advertisers through credit cards already. At the same time banks such as JP Morgan (JPM) and Wells Fargo (WFC) may get a little run for their money now in the small business lending world.
Currently, trying to attain or keep a credit line open that isn’t being used regularly is like trying to not catch fire while standing inside a burning building…not an easy task to say the least. Why? Banks have essentially gone on the defensive and continue to remain in this posture, as they prefer to only take “risk” with select (more lucrative) clients. With Google stepping in as the white knight for this segment of the business community it’s likely to do more than just pad its bottom and top line in untold ways.
The Logistics of it All
Based off initial statements from Google the first beta testers should be able to use the credit card for more than just AdWords. This could be a move to further promote Google checkout and Google Wallet as they look to increase their foothold against competitors in the online transactions space.
The Google card will be a MasterCard (MA) and be offer a competitive annual interest rate of 8.99%. This isn't an introductory rate either. Although earnings estimates will likely be raised on this news given Google’s history when the firm reports again it will likely destroy estimates in our view with its new X-factor.
The New Beauty of Exploiting of Cash on Hand
While most tech firms have recently been getting berated for holding onto cash Google hasn’t. Without question patient Google shareholders are finally being rewarded for remaining quiet about this topic as the firm opens up this new revenue arm with untold potential. With Google approaching almost $40B in cash and not paying any dividends we see this as an excellent way to start leveraging this giant asset in a new way beyond acquisitions or R&D.
Google is just throwing out so many fastballs it’s hard to keep track. First it was Google+, then hot acquisitions, and now the Google AdWords Credit Card. What’s coming next? Who knows but don’t start making assumptions about Google because who knows what they’re cooking up next. Hate to say it but it must suck to be Yahoo (YHOO) right about now. Perhaps they should have just taken the buy out after all from Microsoft (MSFT). Finally, the AdWords Credit Card is just a perfect example why we remain confident in rating Google a “buy” as it reaches new all time highs.

Thursday, April 10, 2008

Canadians are nothing if not loyal to plans

We're loyal and we like points programs. A full 86 per cent of Canadians surveyed told a market study that they participate in loyalty marketing programs.
That's 51-per-cent higher than their U.S. counterparts.
The survey of 2,550 Canadians by loyalty industry expert Colloquy also found:
The Air Miles Rewards Program racks up a 70 per cent penetration level in Canadian households, unlike in the U.S. where the market is much more fragmented.
Canadians are more patient than Americans; they're more willing to accumulate points and miles that yield free travel, in-store merchandise or free reward catalogue redemptions. General adult respondents said that 69 per cent of the programs they participate in offer points, as opposed to only 39 per cent of American adults surveyed.
With the exception of the young adults, Canadians are about twice as likely to redeem a reward for someone other than themselves.
Canadian consumers belong to an average of 2.5 retail programs, 2 financial programs and 1.5 travel programs.
Canadian participation ranked as follows: affluent, 96 per cent; core women, defined as any female 25 to 59 with annual income between $50,000 and $125,000, 95 per cent; seniors, 90 per cent; general adult, 86 per cent; and young adults, 78 per cent.
Interestingly, only 38 per cent of Canadians read their loyalty program statements.

... as Visa and the banks roll out Infinite options

April 10, 2008
Visa Canada now has American Express squarely in its sights. Last month, it launched a new high-end credit card in Canada: the Infinite Card. The target market is well-heeled folk who want the equivalent of an Amex Platinum card in their wallets.
Amex introduced its Platinum card in 1984, first by invitation only but now for anyone who qualifies on a credit check and is willing to pay the $399 annual fee. For more than 20 years, it has dominated the high-end field.
Is American Express worried? Not for a moment, says Barclay Hancock, director of the charge portfolio at Amex Canada.
"Platinum cards appeal to a large and growing market," he says. "Considerable wealth has been created in Canada during the past half-decade. It is only natural that card issuers would look for ways to tap into it."
But, as Hancock points out, Amex Platinum is more than just accelerated rewards. It is also about services. "What it comes down to is, who delivers the best value to customers. That will be the deciding factor."
Patrick Sojka, who runs the website from Calgary, says the high-end battle will depend on which card issuers come up with the best strategy to lure cardholders.
"I don't think Amex is particularly worried," he says. "To date, each of the banks issuing Infinite Visa cards has set its own standards for annual fees, services included and target markets."
The Infinite Card has so many faces that there is no uniformity in annual fees or services attached to it. At TD Canada Trust, for example, the TD First Class Travel Infinite Card will cost $120 a year and focus on those spending between $25,000 and $30,000 a year on their credit card. It will, in fact, replace the current gold card.
A newly introduced wrinkle sweeping the industry is the ability to book travel with any agent. "The idea of flexibility in choice when it comes to booking travel is ... a really big change in the industry this year," Sojka says.
Royal Bank of Canada's new RBC Infinite Card for private clients will cost $399 a year and be available only to high-personal-wealth private banking clients. They book travel and redeem rewards through a new, dedicated personalized travel service.
"We feel that personal service is what our private banking clients want," says Sean Amato-Gauci, RBC's vice-president of credit cards. "They also get a range of special services, such as access to about 500 airport lounges around the world."
CIBC, meanwhile, has used the Infinite category to strengthen its enormously successful Aeroplan Visa line with an Aerogold Visa Infinite Card and a new Aventura Gold Visa Infinite Card.
"The new cards focus on baby boomers who now have considerable personal wealth, travel a great deal and want a card with a lot of extras," says Ernie Johannson, CIBC's senior vice-president of marketing for retail markets. "We think the new category lets us go better head to head with Amex Platinum."
MasterCard Canada has yet to join the fray, although Bank of Montreal has launched its own Gold Air Miles Mosaik MasterCard and HSBC bank has an HSBC Premier MasterCard available only to its personal banking customers.
Visa card issuer The Bank of Nova Scotia is still deciding whether to join the action.
"We are looking at the opportunity a new Infinite Card represents," a spokesperson says.

Good things for reward-point holders who wait

When it comes to collecting points, Canadians are more patient than U.S. peers
April 10, 2008
Terrence Belford

Stephen Brown loves his Aeroplan rewards miles. They've taken him to Whistler, B.C., for three days of skiing, to Italy for two weeks, including a week of cycling in Tuscany, and to Australia with his mother for a family wedding. This fall, they will pay his way to Athens.
Louis Intini, a retired schoolteacher, says his two sons laughed when he first got an Air Miles card a decade ago.
"They said I would never use the points," Intini says. But his rewards points have taken him and his wife, Geri, to Rome and Barcelona. They paid for his flight to Singapore in 2002. He even gave his mother-in-law a $100 food certificate.
Gary Himmel, a chartered accountant and entrepreneur, just wishes he had more time to take advantage of all the rewards points he has toted up on his Royal Bank Avion Platinum Visa. In the past, before he launched his new venture, Ezone, a corporate team-building centre in Etobicoke, he could get away on a holiday at least once a year.
This year, the flight rewards have gone to his wife, Paula, and their two sons, both university students. Those RBC rewards points have paid for each of them to fly to stay with family in Fort Lauderdale, Fla., and will cover Paula's airfare from Toronto to Warsaw next month, then on to Tel Aviv.
What ties these three very different men together is their passion for collecting travel rewards. It is a distinct Canadian trait, says a recent survey by Colloquy, a market research company based in Cincinnati, Ohio.
"Canadians are very different from their U.S. counterparts when it comes to loyalty programs," says Rick Ferguson, editorial director for Colloquy.
Canadian consumers are more patient, more willing to accumulate large numbers of points to get the reward they want, instead of going for quick redemptions for small items, says the survey.
Canadians favour travel first and then merchandise when it comes to rewards, while 55 per cent of Americans go for loyalty programs offering cash back.
The survey also found that Canadians are more generous than their U.S. counterparts. They are about twice as likely to redeem a reward for someone else and they like to share rewards with family and friends.
So, who collects loyalty rewards? Colloquy breaks Canadian consumers into five groups and finds that 96 per cent of Canadians with incomes of more than $125,000 collect; 95 per cent of women with incomes between $50,000 and $125,000 belong to rewards programs, as do 90 per cent of seniors, 78 per cent of young adults and 86 per cent of the general adult population.
"Canadians are much more savvy loyalty program players than their U.S. counterparts," Ferguson says. "They are more likely to belong to and participate in competing programs. That means makers are under constant pressure to create differentiated, unique offerings."
Brown would rank himself among the affluent collectors and agrees you have to be clever about maximizing reward benefits.
At 40, he is vice-president and general manager of a marketing company with clients such as CIBC, Canadian Tire and GE. He collects about 100,000 Aeroplan miles a year on his CIBC Aeroplan Gold Visa card.
"It is mostly through spending," he says. "I do get miles from flights but they are mainly short haul. I put all my business and all my personal spending on my Visa card. I have an Air Miles membership as well but seldom use it.
"To get the most benefit, you really have to concentrate all your spending on just one card and one program."
Intini knows all about concentrated spending. He may be retired but "I spend like mad; I just love shopping."
He has an Air Miles card, a BMO Mosaik MasterCard with Air Miles reward plus, an Aeroplan membership and a CIBC Aeroplan Gold Visa. The Air Miles cards he uses for everyday shopping and the Aeroplan cards for travel.
"I used to use my debit card for most things, then I started using that Mosaik MasterCard and boy, once I saw how the Air Miles added up, I switched to putting everything I could on credit cards," he says.
"Right now, my wife and I are saving points for a trip for two back to Europe. I would guess we collect maybe 6,000 or 7,000 Air Miles a year and right now I have 90,000 points on my Aeroplan card."
Himmel sees the points he collects on his RBC Avion Platinum Visa as a terrific way for his wife and sons to stay in touch with family. His in-laws have a place in Fort Lauderdale and the points he accumulates by putting $5,000 to $10,000 a month on his credit card are usually more than enough to cover air fares twice a year.
He puts almost everything he can for personal and business use on the card. With five cellphones and sophisticated Internet and cable service from Rogers, that mundane monthly bill can sometimes approach $1,000.
"What I do is go on the web, search out flights and prices and then, when I choose the one I want, I just call the RBC travel office, book the flights and pay for them with points," Himmel says. "I know that 30,000 points equals $750, which is a great rate, so redemption is easy for me.
"Paula's trip to Warsaw and Tel Aviv will be the first time we paid for Europe on the points. I am still trying to figure out if I can get away long enough to go with her," he says.

Wednesday, April 9, 2008

Credit cards help ramp up the points

Tuesday, April 08, 2008
Canadian consumers know from experience how credit cards ramp up the collection of travel rewards.
"I use my CIBC card whenever I can, so that I accumulate points and can redeem them for travel and to buy gifts for friends and family," says Ottawa resident Michele Ade.
CIBC's Aerogold Visa gives 1.5 Aeroplan miles for every dollar spent and provides a guarantee that the cardholder's Aeroplan points will not be lost because of 12 months of inactivity in point use.
Several major credit cards offer rewards through Aeroplan or Air Miles. As the competition for customers among credit card companies offering travel-reward programs heats up, the rewards are greater than ever.
More flights on more airlines with fewer restrictions are among the improved offerings. It is possible to use points for more purchases other than flights. There is also competition in the credit card fee structure and in the additional benefits offered.
American Express gives cardholders various ways to accumulate points through a number of programs. Amex has been one of Aeroplan's credit card partners since 2003. It also has its own card offering reward miles, and has just expanded its partnership with Air Miles.
In February, American Express and Air Miles launched the Air Miles Platinum credit card, with which cardholders can earn 50 per cent more reward miles at sponsor retailers.
Later this spring, American Express will offer a new no-fee travel rewards card with unlimited travel choices and redemptions with no travel restrictions. Through its Blue Sky credit card program, customers can redeem points for flights on any airline with no restrictions, or for hotel rooms worldwide, car rentals at any agency, trips on any cruise line, or travel packages booked through any tour provider.
The Bank of Montreal's Mosaik Mastercard offers Air Miles as part of its 2004 agreement with WestJet.
"The strength of BMO Mosaik MasterCard's partnership with WestJet and Air Miles allows us to offer a wider range of cardholder choices than any other travel rewards credit card on the market," said BMO financial group chairman and CEO Tony Comper, when the program was announced on April 23, 2004. "For the more than 15 million Canadians who collect Air Miles reward miles, their reward miles can take them further than ever."
The Royal Bank Avion Platinum Visa Card gives holders the ability to earn one RBC reward point for every dollar spent. The points can be cashed in for travel through the RBC Travel Rewards Centre, a full-service travel agency. The travel points can be used for flights on a number of airlines, including Air Canada. Because RBC travel points are not directly linked to Aeroplan, travellers have a wider choice of companies and flight times.
The Scotia Gold Passport Visa claims that "no other rewards card gives you more flexibility." As with the RBC Avion, points earned can be used on numerous airlines. Scotiabank promises, "With the Scotia Rewards program you can book flights on any airline, to any destination, at any time of the year, without blackout periods, limited seating or Saturday night stay restrictions."
The Toronto Dominion Gold Travel Visa runs its travel rewards program through Carlson Marketing. It also promises travel on a variety of airlines with no blackout periods and notes that "with TD points, you can travel any time of year, including peak periods, even during seat sales. Unlike other travel reward cards, you are not limited to 'reward' seats."
"When you travel a lot for business as I do," says Tourism Industry Association of Canada president and CEO Randy Williams, "travel reward points for hotels and airlines are a great fringe benefit."
Most of the credit cards involved in travel reward programs charge an annual fee, usually between $90 and $120, though the top price is $499. Some also offer a supplemental card at a reduced rate, usually $50. They may require a minimum annual income, usually from $25,000 to $35,000 and frequently offer signing or renewal bonuses in the form of points towards flights or merchandise.
The higher-end cards often include access to Air Canada's Maple Leaf Lounge or other airport lounges and travel or accident insurance as additional cardholder benefits. Some also include baggage and trip cancellation insurance, car rental insurance, hotel burglary insurance and purchase protection.
Diners Club cards, issued by Citibank, were the world's first credit cards. They also carried the first card-based travel rewards program in the early 1980s. Travel points, earned at the rate of one point for every dollar spent, could be redeemed for travel on most airlines. Diners Club International today offers Air Miles through Mastercard

Tuesday, April 8, 2008

With new credit card, BMO shows it's not just playing defence

April 8, 2008
It's easy to forget amid all the dismal headlines about banks these days that they still run a very lucrative business providing financial services to Canadians.
Certainly, the banks are preoccupied about their exposure to U.S. real estate and the impact a slowing economy will have on their loan portfolios. But they're also stoking the furnace that generates an ever-reliable stream of revenue from people like you and me.
This brings us to some important new developments in the highly competitive area of travel reward credit cards. Bank of Montreal has made a bold move for market share by making big cuts in the number of points you need to travel, while several other banks have introduced an elite new Visa card with perks for big-time spenders and travellers.
BMO's newly revamped Mosaik Gold Air Miles MasterCard offers what in some situations is the most efficient way to generate reward flights in the Canadian market right now. Card holders can book flights using the Air Miles program with 20 per cent fewer points than regular members. Example: Card holders need 840 points for an off-season Toronto-New York flight, down from the standard 1,050.

The Mosaik Gold MasterCard gives you one Air Miles point for every $15 you spend, which means you can get that Toronto-New York flight by spending $12,600. If you fly during high season - the regular requirement of 1,300 points would be discounted to 1,040 - then you'd have to spend $15,600.
BMO's competition includes Royal Bank of Canada's Visa Platinum Avion, Canadian Imperial Bank of Commerce's Aerogold and AeroplanPlus from American Express. The rules for these cards differ, but you generally have to spend at least $15,000 for a short-haul flight through the Aeroplan program.
An Aeroplan drawback is the limited availability of "classic" flights, which cost the lowest number of points. Once they're gone, you have to use up considerably more points for a "classicplus" flight.
BMO's re-jigged Mosaik card removes some benefits that used to be offered through a special arrangement with the airline WestJet. However, the new 20-per-cent discount will benefit more people because 11 airlines can now be used for reward flights, including WestJet. The 20-per-cent discount applies across the board to normal Air Miles requirements and BMO says there are no blackout periods or other restrictions.
The new BMO card hits the market at a time when other banks have been updating their travel reward card offerings. For example, Toronto-Dominion Bank's TD Canada Trust division now allows clients to apply points toward trips booked anywhere they want, including travel websites. Previously, you had to use TD's travel centre. American Express introduced a similar card yesterday called Blue Sky (more details on these cards in a future column).
TD, Bank of Nova Scotia, CIBC and RBC are among the banks that have introduced a new Visa card category called Infinite, which is aimed at people who spend heavily on their cards and travel a lot. RBC is reserving its Visa Infinite card to private banking clients, while others are creating Infinite versions of their current travel cards.
CIBC's Aerogold and Aventura Infinite cards will come with a higher credit limit, typically $20,000 to start (compared to a more usual $5,000), and they're typical in offering what's being called extra purchasing power. This means you can go above your card limit with a purchase without fear of a transaction being declined and without racking up a $20 over-limit fee. As soon as you get your next statement, you're required to get your balance down below your limit. Another Infinite upgrade is to include limited travel medical insurance and trip cancellation insurance.
One area where BMO has it over the competition is in providing customers opportunities to build their travel reward point totals through ways other than spending on credit cards. If you have a BMO bank account, you get one point for every $40 in debit transactions. You can also get the monthly total number of Air Miles you earn on your credit card increased by 10 to 30 per cent if you have one to three additional BMO products, say a mortgage, line of credit or chequing account.
Helping customers add points through ways other than charging items on a credit card seems to be a trend. In February, American Express introduced the new Air Miles Platinum that offers 50 per cent more points when the card is used at various Air Miles sponsors. CIBC Aerogold currently offers a 50-per-cent point bonus on spending done at select gas stations, grocery stores and drugstores.
The troubles the banks are having today mean they're not as generous as they were a year ago in offering rock-bottom interest rates on mortgages and loans. The latest developments in credit cards tell us the banks still know how to play offence as well as defence.
BMO's new MasterCard
What's New: A 20-per-cent discount on the usual number of points required for reward flights under the Air Miles program
Choice of Airlines: 11 serving more than 500 destinations
Points: One for every $15 in spending (two points for every $15 spent at Shell gas stations)
Annual fee: $90
Car rental insurance:
$29 extra annually
Other insurance: $99 extra annual cost for travel medical coverage and other insurance
Bonus points:
150 for signing up

American Express Launches Blue Sky Credit Card

--No Fee Rewards Card Lets Cardmembers Use Points for Any Travel--

Amex Bank of Canada introduces the no-fee
American Express Blue Sky Credit Card, a new style of travel rewards Card thatgives consumers the freedom to redeem points towards any travel purchase charged to the Card, including any airline, hotel, cruise or car rental company. Cardmembers can redeem with no blackouts or restrictions. Even discount travel offers are eligible. Cardmembers can earn points everyday by charging their regular purchasesto their Card at any American Express merchant.
Points can then be used as a credit towards travel related purchases charged to the Card. There is no need to be enrolled in a frequent flyer program. "Blue Sky introduces a brand new rewards concept with tremendous choice and flexibility", says Rob McClean, Vice President of New Product Development for American Express. "Consumers can collect points and use them whenever they want towards their travel spending. It means more people will be able to
benefit from travel rewards and enjoy the benefits in a fast, easy and convenient way" Blue Sky Cardmembers will earn points at a very attractive rate of 1.25 points
for every $1 in purchases. Which means, for every $8,000 in purchases, Cardmembers earn 10,000 Blue Sky Points, equal to a $100 travel credit. Points can add up quickly and
can be used anytime towards any type of travel purchase charged to the Blue Sky Credit Card. Customers are free to book with any airline, or through any
travel agent or online service. They can use their points towards the absolute best travel deals available anywhere, including seat sales and vacation packages.
This means unlimited travel choices, zero travel restrictions, and a fast way to earn free travel. The launch of the Blue Sky Credit Card is part of an aggressive push by
American Express to accelerate the growth of its business in the competitive travel rewards sector of the market. American Express is already the only Card issuer
that offers a suite of co-brand rewards Cards with two of Canada's leading loyalty programs, as well as its own proprietary program called Membership Rewards.

More About Blue Sky
With Blue Sky, there are no restrictions on the number of points earned
and points never expire. As well:

- Travel rewards can be redeemed with as little as 10,000 points.
- After the initial 10,000 points, Blue Sky points can be redeemed in
increments of 5,000 points or $50 travel credits.
- Blue Sky has no annual fee, gives the flexibility to carry a balance,
and offers a 12,000 points bonus for new Cardmembers who spend $3000
in purchases in the first 6 months of Cardmembership.

Other standard American Express benefits include Front Of The Line access
to entertainment events and Travel Accident Insurance.

About American Express in Canada
American Express in Canada operates as Amex Bank of Canada and Amex
Canada Inc. Both are wholly owned subsidiaries of the New York based American
Express Travel Related Services Company, Inc., the largest operating unit of
the American Express Company. Amex Bank of Canada is the issuer of American
Express Cards in Canada. Amex Canada Inc. operates the Corporate Travel,
Travel Services Network and Travellers Cheques divisions in Canada. American
Express opened its first offices in Toronto and Hamilton in 1853 and now
employs 3,700 Canadians coast-to-coast.