Barclays has a storied history in credit cards. The firm issued their first credit card in 1966, in merry old England, one of the first launches outside of the U.S. for the fledgling credit card business. The UK was a natural expansion market for what was then known as BankAmericard and Mastercharge, now Visa and Mastercard.
Barclay tried to follow the British Empire’s neverending sun when they acquired Asba in South Africa and 12 other countries, but they divested the firm in 2020. Still, they remain active in the United States markets. Without a meaningful branch network, the firm is a one-trick pony in the United States. Unlike Discover and Capital One, who both learned the importance of diversifying their business to cross-sell and shield their risk when the economy shifts (like today). Barclays has a limited play in the U.S. With typical COVID dangers at home, and the firm has little to fall back on to keep its business at a level where they can compete with cards issued by American Express, Bank of America, Capital One, Chase, Citi, or even Wells.
Barclaycard has an array of co-branded offers in the United States. Active programs include Holland America Cruise Lines, NFL Extra Points, Wyndham Hotels, Lufthansa, and Jet Blue. They’ve had some big losses recently. Goldman Sachs (GS) aced Barclaycard on the Apple Card. Barclay’s original Apple Card was a sleeper and lacked the elegant integration that GS built into the product. I have a GS Apple Card, and while I contain it to my iPhone and prefer my Amex, Discover, or Chase cards every day, the GS. Apple card functions perfectly on my mobile device and has a cool white metal card to boot.
Barclaycard had another significant loss in 2020 when Barclays beat them on the G.M. renewal, which ended in a $2.5 billion acquisition. The Barclaycard American Advantage card is also a sleeper, and the Citi version outpaces it, at least in my view. Citi’s American Airline outdates the Barclay version by decades.
With an emphasis on travel and hospitality co-brands, which have certain downsides since COVID kicked in, the latest industry rumor about Jet Blue shopping its co-brand business should send shivers to Barclays. Jet Blue appears to be surviving COVID, with the stock currently trading at $21.02, up from a March 2020 low of $6.61. Every penny counts if you are in the airline business.
The WSJ reports that Goldman is talking about “taking over” Jet Blue’s credit card program. Goldman Sachs has an extreme interest in credit cards these days. As the WSJ indicates, G.S. doubled its credit card business by more than $2 billion between December 2019 and 2020. G.S. now has $4.3 billion in U.S. credit cards and in less than two years is pushing its way to the top of the industry. GS has a ways to go to outpace Chase, which stands at $144 billion, but G.S. looks like they want to face off with industry leaders.
The Jet Blue deal is still open. If it does go to Goldman Sachs, that will be another big win for the Wall Street firm, and for Barclaycard, it might be a death knoll.
Will the NFL card be next? That might be as exciting as seeing Tampa Bay win Super Bowl.
Overview Provided by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group
