The Halifax is stepping up its attack on the Big Four banks
The Halifax is stepping up its attack on the Big Four banks by launching the first ever current account in the UK paying cashback on debit card purchases. More major banking initiatives will follow in the New Year.
The new product, called the Moneyback current account, offers 1% cashback on debit card purchases up to a total of £10,000 automatically payable tax-free once a year to the account holder. Halifax calculates that cashback potentially worth approximately £100 a year is available to the average UK household. Cash Is No Longer King Launching in February 2005, Moneyback is in tune with the premier position that debit cards occupy in the UK consumer's wallet. Debit cards now account for 65% of all card purchases and more than eight in ten adults have one. This year, plastic should overtake cash payments with the total value of card transactions expected to exceed £269 billion. (Source: APACS) The UK consumer is ready for change, especially the 27 million current account holders with the Big Four. NOP World research, conducted on the Halifax's behalf, found that 71% of UK adults would find a current account offering cashback an attractive proposition. The Halifax Strategy Halifax has led the way in UK banking by offering 30 or 40 times more credit interest than the Big Four. This strategy is paying dividends. Halifax and Bank of Scotland increased their combined current account market share from 9% to 14% in just three years, a significant move in a mature market. With the launch of Moneyback, Halifax opens up a new front by targeting the millions of frequent debit card transactors who bank with the Big Four. According to the Household Expenditure Survey, the average UK household of 2 adults and 2 children spends over £16,000 a year on everyday items and treats like food, clothing and holidays. All of these items would earn cashback if paid for with a Moneyback debit card (see Editor's Notes). Halifax and Bank of Scotland are committed to increasing their benchmark market share in current accounts to the upper end of the published 15% - 20% range. The bank aims to do so by doubling the number of current account customers who have their main banking relationship with Halifax or Bank of Scotland: Moneyback will play an important role in meeting this target. How the Account Works Customers who credit their account with £1,000+ a month, an amount significantly less than the average UK net monthly earnings of £1,404, will be eligible to apply for Moneyback. For qualifying Visa Debit transactions up to a total of £10,000 each year, customers will receive 1% cashback and 0.1% thereafter. At the end of each calendar year, the cashback earned will automatically be paid to the relevant account. All purchases by debit card of goods and services will qualify for the 1% cashback. Cash advances, bill payments and foreign money/travellers cheque orders will not qualify. A dedicated switching team at the Halifax will manage the smooth transfer of accounts for new customers. The team will transfer all the direct debits and standing orders on the customer's behalf. The Moneyback account will be available to existing eligible Halifax customers, unlike a number of recent current account deals offered by some competitors. Andy Hornby, CEO, HBOS Retail, said: "Moneyback is a genuine first in the UK banking market. The Moneyback account is a simple, value for money product that we know will appeal to the many UK consumers fed up with the poor deal they get from the Big Four banks. Value for money is here to stay and the Big Four will just have to get used to that uncomfortable reality. We aim to make life even harder for them next year when we back the launch of Moneyback with a new high profile advertising campaign." Peter Jackson, Head of Banking at the Halifax, said: "Moneyback opens up a new front in the battle for UK current accounts. Up until now, loyal customers, who frequently pay by debit card, have been ignored by the major banks. Not any more. Those customers who are disloyal to the Big Four and join the Halifax will get a much better deal. It is as straightforward as that."
Date published: 12/21/2004 12:00:01 AM
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