Richard Branson's Virgin Money is shutting down its SA credit card

Obviously, this is not a good time for Virgin Group! Virgin Money, owned by Richard Branson has reportedly announced that is shutting down its South African credit card after 12 years in the local market.

This move is part of the company’s ambition to be a local fintech leader through Virgin Money Spot, which is a cashless platform launched in February 2018, a Virgin Money spokesperson said.

According to emerging reports, Absa will take over the 118,000 Virgin Money credit card customers, which hold total credit of more than R750 million between them, according to numbers provided by Cowyk Fox, managing executive for everyday banking at Absa retail and business bank. That is down from total credit of more than R1 billion reported by Virgin in 2013.

Absa has 1.5 million credit cardholders, and the bank has issued them with just under R32 billion in credit, Fox said.

“Virgin Money did not sell the business to Absa. The core product is owned by Absa which offered the Virgin Money South Africa branded card to customers that have an affinity for the Virgin brand under a brand license agreement,” he said.

Absa provided the backend support for the Virgin Money credit card.

Fox said that there will be no impact on jobs from the closure of the Virgin Money credit card.

Customers will now be offered an equivalent Absa-branded product, or be given the option to pay off their credit cards overtime if they do not wish to take up an Absa credit card.

“Virgin Money South Africa is in discussions with the Virgin Group in terms of how they will conduct that business when the official de-branding takes effect,” Fox said.

Virgin Money first set up in South African in 2006 and launched the credit card in 2008. Virgin Money previously closed down a local insurance business, after its life and short-term insurance offering failed to gain traction.

In 2013, Branson harboured ambitions that the company may obtain a South African banking licence.

Andre Hugo, Virgin Money South Africa CEO, declined to answer questions, instead issuing a short statement through a public relations company. “Absa started communicating with Virgin Money credit card customers on Tuesday, 25 August, and the migration is expected to be complete by the first quarter of 2021,” the statement read.

The company will focus on its fintech ambitions, which includes Virgin Money Spot, it adds.