At first glance, putting the fate of a credit card in the hands of its users may make little sense to issuers. But, that approach could transform cardholders from customers to stakeholders – which is what one upcoming credit card seems to be hoping. Could this be the start of trend?

Expected to launch next month, the Barclaycard Ring credit card boasts a culture of transparency, social activity and crowdsourcing.

On paper, it is a stellar low-interest credit card with a variable APR of 8% and no annual fee, balance transfer fee or penalty APR. I wouldn’t be surprised if the card required a higher-than-average credit score to qualify.

But, its main attraction is Barclaycard’s decision to disclose the card program’s financial profit and loss statements, allow customers to suggest and vote on card features and share revenue generated from the card program.

These features, if you can call them that, set this card — and its users — apart from others.

Have a stake

In the case of the Ring card, transparency is much more than just replacing a brick wall with glass. Barclaycard US is offering a spot in the conference room.

Ring cardholders take on the position of shareholders, who have a vested interest in the card product. And by connecting these cardholders through a community forum, they serve as an advisory board and product-development team.

For example, excess profits could be returned in the form of a customer credit if customers voted for it, Paul Wilmore, managing direct of consumer markets for Barclaycard US, told American Banker.

Sounds like dividends, right?

However, such incentives may cause mixed motives by customers. If I had the card, I would want to convince everyone to sign up for paperless statements. But I’d also like everyone to keep a balance, something that every consumer should refrain from doing.

Community-based crowdsourcing and transparency about finances may safeguard Barclaycard US from public backlash over changes to card features and terms.

Everyone remembers the consumer protest that erupted over Bank of America’s plans to charge a $5 debit card fee. If that decision came from a customer poll, things would have played out differently for Bank of America — and possibly the entire banking industry.

Essentially, the transparent approach says, “You can see our books. If things go well, you get a piece of the pie. If not, you choose the changes that happen to your accounts.”

However, even without the transparent and social traits, the Ring card is unlikely to experience public-relations disasters, since its terms are already so attractive.

An industry trend in the making?

More importantly, Barclaycard US is setting the example of what every credit card issuer should do, especially if they offer credit cards that carry annual fees, high interest rates and lucrative rewards.

Before it changed in 2008, the Chase Freedom® card offered 3% cash back on the customer’s top three purchase categories and 1% cash back on everything else. Currently, the card gives 5% cash back on quarterly rotating categories, selected by Chase, and 1% cash back on everything else. Many cardmembers loathe this format.

If Chase crowdsourced ideas for new terms, customers could have suggested a more agreeable cash back structure.

I’m looking forward to see how much impact the community crowdsourcing will have on the Ring card and its customers. If customers’ voices have a significant effect, I’d certainly be an advocate of the adoption of this approach for all financial products, not just credit cards.

Consider the case of PerkStreet. The financial start-up recently changed the terms of its namesake perks — dropping unlimited 2% cash back on debit cards and adding 2% cash back at select major retailers. It would have been interesting to see the ideas from customers if they were able to offer suggestions. PerkStreet has already showed signs of crowd sourcing, which is used to determine its monthly 5% cash back categories.

Small steps, perhaps.

Follow Simon in the Community and on Twitter: @simonzhen.

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  • Andy

    Simon, great article but the concept isn’t really all that “new”.  That’s been the philosophy of credit unions for decades.  Perhaps Barclaycard will do a better job of educating the consumer –