Chetwood’s first credit card targets the near-prime market segment with the aim of empowering customers who typically have fewer credit options available to them, reports Douglas Blakey
Chetwood Financial’s Wave credit card will not appeal to the majority of UK credit cardholders given its modest credit limit but it represents an important extension of the bank’s product range and serve an unrepresented segment of the market
A best-in-class app enabling near-prime customers to service their card and manage their money effortlessly-that is the marketing pitch from digital challenger neobank Chetwood Financial for its first credit card offering.
Dubbed Wave, the credit card provides immediate use of a digital card followed by a plastic card in the post within days.
Designed by customers for customers, the Wave credit card offers flexibility and ease for near-prime consumers who typically have fewer credit options available to them, with less functionality. Those who apply for a Wave card are provided with a pre-approved real rate and their credit limit upfront so they can make an informed decision, without affecting their credit score.
Wave credit card features
Customers can manage their card through the feature-rich Wave app available on iOS and Android, including:
- Fast and secure access with biometric login, plus document and selfie matching to confirm identity
- Ability to add the card to Apple Pay or Google Pay to make secure payments instantly;
- Card freezing and unfreezing capabilities in case of loss or theft;
- Changing repayment amounts should customers want to pay more;
- Alerts to help customers control spending and monitor outgoings to improve financial behaviour, and
- UK-based customer support through live chat
Cardholders are also afforded a three-day grace period for missed payments.
“The Coronavirus pandemic has heavily impacted many individuals’ finances over the past two years, meaning that access to safe alternative sources of credit has never been more important,” says Andy Mielczarek, CEO of Chetwood Financial.
“At Chetwood, we strive to create tailored products that help make people better off. With the launch of Wave, customers are able to take an important step closer to achieving their financial goals, from paying off larger balances, to learning how to become more financially responsible for the long term.”
GlobalData research: UK credit card sector by numbers
Consumers in the UK have been avid users of credit cards. However, Covid-19 and the subsequent economic uncertainty has forced many consumers to cut down on unnecessary spending. In 2020, credit and charge card payment volume, value, and frequency of use declined by 19.0%, 19.8%, and 17.1% respectively.
But with the gradual recovery of the economy and a rise in consumer spending, the credit and charge card market is anticipated to record healthy growth. GlobalData estimates that the market is set to register robust CAGR growth of 6.4% in the four-year period to 2025 in terms of card payment value.
In the UK, credit cards account for 37.1%of cards in circulation. Credit and charge card penetration in the UK stands at 0.9 cards per individual in 2021, compared to Canada (2.2), the US (2.2), Spain (0.8), Sweden (0.8), Germany (0.5), France (0.5), and Italy (0.5).
Credit and charge cards account for 19.5% of total card payment value. Credit and charge card payment frequency in the UK is estimated at 53.1 transactions per card per year in 2021, compared to France (120.2), Canada (78.4), Sweden (73.8), the US (59.6), Spain (54.2), Italy (44.1), and Germany (39.6). In 2021, credit and charge card payment turnover in the UK is estimated at $3,831 – compared to France ($7,272), Canada ($5,561), the US ($5,149), Sweden ($4,486), Italy ($3,454), Germany ($2,745), and Spain ($2,658).
On average, consumers in the UK use their credit and charge cards 53.1 times a year to make payments. The average transaction value is £52.79 ($72.13).
The average consumer in the UK owes £826 ($1,129) on credit cards in 2021, with the average balance owed per credit card at £945.
During the Beta testing phase of Wave, Chetwood worked closely with ClearScore to ensure the credit card and its features were performing as expected and fulfilling customer needs, actively responding to initial customer feedback to further improve the product.
Feedback provided by the credit card’s first 2,000 customers through ClearScore has been positive, with 96% of those who responded describing the application process as ‘very easy’ or ‘easy’, and 98% of customers rating the Wave card as a 4-5 out of 5 for overall satisfaction.
The Wave credit card will offer credit limits of £250-£1,750 to new applications, increasing up to £10,000 over time based on customers’ eligibility. Customers can opt-in and out of credit limit increases and decrease their limit at any time through the app.
As part of the Wave offering, Chetwood has also launched a Repayment Calculator to encourage better financial behaviour and help customers understand how interest works on credit cards. By using the easy in-app tool, customers can see how paying a little extra than the minimum payment each month can reduce the amount of interest and clear their balance quicker.
Wave is the fourth banking product launched by Chetwood, having brought its first lending product LiveLend, described by the bank as the world’s first dynamic loan, to market in November 2018.
The LiveLend Reward Loan uses technology to adapt to customers’ good financial behaviour, reducing their loan rate when their credit score improves. Chetwood says that the feature helps encourage customers to further improve their financial position whilst offering a fast, fair and flexible way to borrow.