What do banks get out of Max Cash Preferred?

[whirlaway]

I recently got the Banc of California MCP Mastercard.   The card is from Banc of California but the CL and the underwriting is supposed to be on Elan Financial Services though.   So what do the regional banks get out of this arrangement?    I understand that it might be a way for people to get interesting in opening checking and savings accounts etc., at those banks.   But then, one doesn't have to be in the same geographic area as these regional banks.   Is there any other incentive for the banks to sign up for this?   

Thank you!

[Anonymous]

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@whirlaway wrote:

I recently got the Banc of California MCP Mastercard.   The card is from Banc of California but the CL and the underwriting is supposed to be on Elan Financial Services though.   So what do the regional banks get out of this arrangement?    I understand that it might be a way for people to get interesting in opening checking and savings accounts etc., at those banks.   But then, one doesn't have to be in the same geographic area as these regional banks.   Is there any other incentive for the banks to sign up for this?   

Thank you!

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I guess we need to know who pays who!   One possible model, which doesn't answer your point very well, is that Bank X pays Elan to handle their credit card processing (including approving applicants and servicing the account).   That way, Bank X appears to have credit card offerings which may keep there existing customers satisfied, but doesn't seem overly compelling.

Another model is that Elan is basically paying the bank for referrals (assuming that Elan collects all swipe fees and interest etc).  Bank X "sends" a customer to Elan and gets some payment (flat fee? percent of future fees?) back.

But I don't know the real arrangement!

[SouthJamaica]

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@whirlaway wrote:

I recently got the Banc of California MCP Mastercard.   The card is from Banc of California but the CL and the underwriting is supposed to be on Elan Financial Services though.   So what do the regional banks get out of this arrangement?    I understand that it might be a way for people to get interesting in opening checking and savings accounts etc., at those banks.   But then, one doesn't have to be in the same geographic area as these regional banks.   Is there any other incentive for the banks to sign up for this?   

Thank you!

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I'm not an insider, but my guess is that the actual lender is the bank, not Elan, so the bank is earning the interest and the interchange fees, while Elan is getting fees for the services it provides (application process, processing transactions, statements, compliance, etc). I.e. I think Elan is just a way of outsourcing the voluminous work and expertise involved in handling credit cards.

[Roger1071549]

My understanding has been that it really depends on what deal the bank and Elan agreed to. One bank as refernce (Fulton Bank) that uses Elan, it looks like Fulton gets a referral fee. 

I am not an insider either but I am making an educated guess. When you look at at the call sheet that Fulton files with the FDIC, there is a field on the income statment for interest income from credit cards. That is listed as $0 on the latest call sheet. 

If they held the loans, I would expect that would not be $0. 

[FireMedic1]

Digital Brochure:

https://mojosolo.com/elan-ebrochure-fi/