Online retailer and department store chain, Myer Holdings, is preparing to overhaul its financial services strategy after calling for tenders for its merchant acquiring mandate and flagship credit card program.
Banking Day confirmed through several industry sources on Tuesday that the retailer is looking to rework its partnerships with financial institutions as part of an effort to reduce acceptance costs on card transactions and to boost revenue from its Visa credit card program.
The strategic reset by Myer is bound to end the retailer’s partnership with Macquarie, which currently acts as the funder and issuer of the Myer credit card.
As reported in Banking Day in early March, speculation has been mounting that Myer would abandon its arrangement with Macquarie following the bank’s decision to stop accepting new credit card applications since April 2020 when the Covid-19 pandemic hit Australia.
Payments experts have been questioning the tenability of the Macquarie arrangement given that the freeze on new card applications has prevented Myer from fully leveraging its customer loyalty program (known as ‘MYER One’) to support sales volumes.
Myer also receives fees from Macquarie for originating new card holders.
Under revenue sharing agreements, it is also entitled to payments from the bank for increases in customer spend generated through the loyalty program.
NAB probably looms as a frontrunner to take over as the issuer of the credit card, particularly given its acquisition of Citigroup’s corporate white label cards business on 1 June.
Citi currently manages credit cards for Qantas, Coles and Kogan.
Latitude Financial, which supports credit cards marketed through Harvey Norman and JB Hi-Fi, shapes as another potential candidate.
Myer’s decision to open a tendering process for its credit card will likely prompt speculation that Macquarie’s other big corporate card client – Woolworths – will do the same.
The Woolworths credit card program has also been closed to new applicants since Macquarie instituted the measure at the start of the pandemic.
Despite the relative decline in market share of department stores in recent years, Myer is still ranked among the 15 largest retailers in the country by sales volume.
Commonwealth Bank currently holds Myer’s merchant acquiring mandate but that might be at risk if other banks are better placed to deliver cheaper debit card processing with seamless access to least cost routing.
In addition to wanting to lower its average acceptance costs for card payments, it is also believed that Myer is seeking a banking partner that can help it to integrate its payments system across different retail channels.