Originally Posted by
cbn42
When Chase uses ChaseNet to bypass Visa's cost structure, they also give the merchant a lower processing fee. So it's not at all clear that this improves their profits from the transaction and enables them to offer more competitive reward programs.
I have a CSR, but I will dump it after getting and using the sign-up bonus.
Overall, I think you are reading far too much into this. Chase simply got a good deal from Visa due to their volume. Visa was willing to give them a discount if they do their own processing on the network. I don't think this is some major shake-up.
I appreciate the feedback. Yes, it does seem true that if Chase is making less money on transactions, its ability to offer richer reward programs is limited. I think we are definitely going through an age of AF cards as a result. Looking at pretty much every refreshed card or new card launched, they are all pretty significant AF cards (AE BCP, CO Savor, AE Gold, Chase CSR). With just a few exceptions out there such as BofA 3-2-1 and Barclay's Uber. You would have to go back to Citi DC as the last major high-value widespread rebate card launched without an AF.
Your point on taking the SUB and dropping the card is notable. It is not my style to take cards for this purpose, but I know it is very common among the rewards set. The banks did this upon themselves. It definitely became a disease because there was pressure by other issuers to match the growth. Imagine a world of so much better quality blogs and internet information if it wasn't due to all of these SUBs and referral fees. And when a bank doesn't do them (Barclays comes to mind on some of their products), they get little to no mindshare. I can't see Chase's aggressive SUB programs as helping their own situation either in light of their card revenue.
Funny thing though, I think people tend to keep these high AF cards longer than they say. Maybe they get an incentive for year 2 or start to really like the benefits (airport lounges, higher rewards on category purchases, etc.). Banks can only benefit in this situation.
Well, if Chase needed to make a change or transition off its Visa rented-network deal, it would need plenty of time to do so. I expect Visa to do whatever Chase wants at this point (as Chase has only become bigger and more powerful since), but Chase is going to have to figure out how to match the profitability of Barclays or AmEx on a given card member.
If Chase has to act rationally, this is why its United deal is in trouble, it would have to not make financial sense to keep United in the fold (matching or beating offers from other issuers). I am amazed how often each month I am getting one-time different offer incentives to upgrade my Disney no AF card to Premier or switch to the new Marriott card. It tells me that the cards I have are just not that profitable to them.
Interestingly, I am at that point where my card spending is pretty much at the max it can be unless I start new organic spending. I can change which cards I use for a given transaction, but if I can't pay for it with a card, that is unlikely to change. Because of the refreshed BofA 3-2-1, Savor and significant hotel deals on AmEx Offers, my Chase spend has mostly dropped down.