Supermarket credit cards cause concern

Migros and Coop will enable customers to pay and earn loyalty points with the same card Keystone

The plans of Switzerland's two largest retailers to launch their own budget-rate credit cards in autumn have raised concerns about data protection.

This content was published on May 1, 2006 - 17:40

The Consumer Protection Association says that combining the credit cards with a loyalty card would allow Migros and rival Coop to snoop on customer buying habits.

Last week Coop announced it would launch "Switzerland's cheapest credit card", costing SFr9.90 ($8) a year – only to be undercut a few hours later by Migros, whose card would set clients back SFr4.40.

Coop countered by promising "ours will be the cheapest when it is launched".

The concepts outlined by the two retail giants – who have a combined food market share of around 70 per cent in Switzerland – are largely identical.

The credit cards will be combined with their existing loyalty cards - allowing customers to accumulate points for all purchases made - they will be valid worldwide and will be considerably cheaper than anything else on the market.

By comparison, Switzerland's two largest banks, UBS and Credit Suisse, both charge SFr100 a year for their standard credit cards (although the first year is free at UBS and costs SFr50 at Credit Suisse).


Customers can be forgiven for rubbing their hands at the thought of near-free credit cards, but not everyone is happy. The Consumer Protection Association is concerned by the question of data protection and says transparency for customers must be guaranteed.

"[The combined cards] let customers collect points with their credit cards – this is the point we are very sceptical about," the association's Jacqueline Bachmann told swissinfo.

"If Coop and Migros decide to analyse the behaviour of the consumers, they have a lot of information. They gain a lot more than consumers who can buy a new pan or whatever with their points. It's very asymmetrical."

Bachmann acknowledges that the new rates are good value but fears customers aren't fully aware of how much and what type of information they give companies.

"We have to realise that Migros and Coop have started to rule our lives – one day we are going to have budget funeral ceremonies!"

But she added: "Coop is a little bit more harmless than Migros because Coop does not work with data from their Supercard, but with Migros you allow them to use the information you give them with their Cumulus card."

The association demanded stringent checks of the data processing system by the federal data protection commissioner, as ultimately the retailers would know the credit rating of their customers.

Sell-by data

Hanspeter Thür, the federal data protection commissioner, told swissinfo that combining loyalty cards with credit information was new terrain for his organisation.

"The two chains of supermarket... must be transparent about the data transactions. They must inform their clients which data will be accessible by third parties, for how long the data will be stored and so on."

Thür says that in any case involving additional processing of personal data, sooner or later the question of data protection will be raised.

"We will definitely be asking them how their data-processing concept is organised with this new dimension of data processing with credit-related data," he said, adding that the supermarkets' latest strategy presented a new challenge.

swissinfo, Thomas Stephens

In brief

There are an estimated 3.4 million credit cards in Switzerland, issued by Visa, Mastercard, American Express and Diners Club.

Around 360,000 retailers and merchants accept credit cards.

In 2004, 82 million transactions worth SFr15 billion were recorded.

Domestic interchange fees were worth SFr840 million in 2003.

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Key facts

Migros 2005 results:
Group net profits: SFr699 million (2004: SFr545 million)
Turnover: SFr20.39 billion (+0.4%)
Staffing levels: 81,049 (-1,223)

Coop 2005 results:
Group net profits: SFr270 million (-15.6%)
Turnover: SFr9.5 billion (-1.1%)
Staffing levels: 37,370 (-4.9%)

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