BOC raises threshold 45%, Laiki 40%
Bank of Cyprus and Laiki credit card holders have been rushing to redeem their loyalty points and cash in on rewards as both banks radically revise their bonus points scheme and up the threshold to redeem vouchers.
Their loyalty rewards schemes, ironically valid from April Fool’s Day, bring the island’s two leading banks closer in what appears to be a cartel formation.
You can still buy airline tickets, hotel stays, sun glasses, stereo hi-fis and plasma TV screens, but we are still far off from redeeming points towards buying a car.
Until noon Thursday, BOC card holders can redeem 1100 points from the bank’s ‘Dorometro’ loyalty programme for a CYP 100 voucher. As of April 1, this will be raised to 1600 points for a CYP 100 voucher. Card holders earn one point for every ten pounds spent using Visa or MasterCard plastic, while points are not earned on transfers and ATM withdrawals.
Laiki Bank notified customers of a similar move almost a month ago, raising the threshold for rewards redemption as of next Monday by 40%, from 10,000 points to 14,000 points for a CYP 100 voucher. Each pound spent using VISA and MasterCard earns a point in Laiki’s ‘Psoniste Kerdiste’ (Shop and Win) scheme.
This follows similar action announced by Hellenic Bank last December, that raised the threshold for travel and hotel redemption from 11,000 to 14,000 points for a CYP 100 voucher, but kept the rewards scheme for electronic and consumer goods at 10,000 points for CYP 100. Each pound spent using VISA or MasterCard earns one point.
Alpha Bank remains the cheapest with 10,000 points needed for a CYP 100 voucher. Alpha only has VISA cards and bank officials said there are no plans at present to revise the credit card loyalty scheme.
The reason behind the action is the narrowing of profit and cost margins, as traders continuously seek to pay lower commissions to banks, yet benefit from an increase in transaction volume.
From an average 3.5% commission paid out by traders to the banks-owned JCC Payments Systems card clearing house eight years ago, this was reduced to 2.6% three years ago and to 2.1% today. As a result, banks have been raising the threshold for points redemption and seeking other sources of revenue to reward loyal cardholders.
Bank of Cyprus, that commands a 40% market share for its VISA, MasterCard, American Express and Diners Club credit cards, has added new categories for points redemption, beyond the traditional travel, hotels and electronic goods, making it almost identical to the Laiki cards rewards scheme.
BOC Cards Centre General Manager Harris Pistos told the Financial Mirror that the new categories include petrol filling stations, supermarkets and bakeries.
“Before, about 95% of our card holders used to exchange their vouchers for purchases on travel related services. Now, we have expanded our range to include Alfa Mega and Hermes stores, Zorpas bakeries with a second bakery group under negotiation, ExxonMobil petrol stations and all the Lefkaritis locations (Petrolina, Lina, Agip),” Pistos said.
He added that American Express, that was introduced by Bank of Cyprus less than three years ago and the AmEx Blue card a year ago, will not be subject to change. One still needs 1200 points to get a CYP 100 voucher.
However, Rodoulla Christodoulidou at Laiki’s Card Services, believes her bank still maintains an advantage over BOC.
“Our loyalty scheme introduced points redemptions at Alfa Mega and Orphanides stores, as well as ExxonMobil stations three years ago, but our biggest advantage is the redemption at any of our ATMs,” Christodoulidou said.
“This meant that our loyal customers have redeemed their rewards on the spot and used them at super markets, many of which have Laiki ATMs located on site or nearby. In effect this doubled and then tripled the turnover of rewards redemption, so we did not have cardholders making a rush for bank branches as they could get their rewards any time, any day,” she added.
