While it does not make sense to stop these tie-ups directly, the reasonfor issuers to tie-up with businesses is the profitability of credit card business without the right regulation and the high profitability motivates issuers expand market share aggressively.
Why did our useless Consumer Association and authorities allow this to happen. Many of you will say it is the same in other countries. Come on we allow these practices simply because other countries allow them?? Our regulators don't have brains to figure out whether it is good for our society and citizens before allowing banks to issue credit cards with the current set of regulation. After all the problems caused by the of credit cards in a number of countries, our govt still don't have the common sense to do things differently - why did we pay them so much to copy bad ideas from other countries.
What has happened is the aggressive promotion of credit cards has caused the rollover credit card debt in Singapore to balloon to $3.6B. This debt that earns 24% interest is highly profitable for the banks but hurts our society. Banks make $864M every year from this - enough to provide every kidney patient with free dialysis + nursing home for the homeless old folks + medical care for every uninsured person in Singapore + free education for every poor student. This is parasitic banking. You may laugh at Malaysia for being backwards in many areas but when the govt detected this problem a few years back, it quickly implemented a cap limiting the credit card interest rate at 13%.
Many countries have realised that the banks need to be rein in before they harm the society further. Less than a month ago, US President Barack Obama signed sweeping credit card reforms into law to shield American credit card holders from predatory fees, among others[Link]. With mounting credit card debts and a tough climate, could now be a good time for Singapore to consider similar reforms. However, as always, it is difficult for our authorities to do the right thing because interests of the PAP govt is now diversified beyond what is good for ordinary Singapore. We need the equivalent of Harvard Professor Elizabeth Warren. She has risen to prominence for her research on the practices of banks and how their lending activities can harm a society if not properly regulated. I read her work a few years ago before the current crisis took place and she has been right on so many things - she is now on several oversight committees looking at new regulation for the banking industry. Here she is talking about reforms needed for the credit card industry - there are many lessons here for our regulators. The same regulators who failed to protect investors from mis-marketing of structured products and has now allowed these credit cards companies to proliferate their bad practices.