More incentives for cardholders as competition grows<\/p>\n
I. Christianto
\nContributor
\nJakarta<\/p>\n
The collapse of many business groups following the economic
\ncrisis in 1997 dramatically changed the country's banking
\nbusiness.<\/p>\n
Local banks that had, in the past, focused on major corporate
\nborrowers in channeling their funds have now turned to small and
\nmedium companies and, of course, individual clients as the main
\ntargets of their loans.<\/p>\n
Besides the decline in the number of solvent big companies as
\na result of the crisis, many banks also see big corporate clients
\nas more risky than smaller clients.<\/p>\n
Subsequently, consumer financing -- which continues to show
\nrapid growth due a continued increase in personal consumption
\nexpenditures -- remains the most attractive for banks.<\/p>\n
In turn, this has resulted in tighter competition in the
\ncredit card business, one of the most effective tools for banks
\nto channel their idle funds to the consumer financing sector.<\/p>\n
The sharp competition can been seen from a wide range of
\nincentives offered by issuing banks to lure new credit card
\nholders.<\/p>\n
Local banks generally issue both Visa and MasterCard brands in
\norder to take advantage of the growing credit card market.<\/p>\n
Incentives such as reward points that can be exchanged for
\ngifts or shopping vouchers and discounts at select stores, or
\nfree life insurance premiums, low interest rates or low
\nmembership fees -- in addition to big cash prizes -- are quite
\ncommon nowadays.<\/p>\n
Some banks also offer a lower interest rate, and sometimes a
\nfree interest rate for the first six months, if their clients
\nhave switched their membership from another credit card issuer
\nand transfer their balance to the new one.
\nCertain banks have also opened counters in the city's major
\nshopping malls to \"catch\" new clients on the spot.<\/p>\n
Amex, for example, offers an interest rate as low as 1.65
\npercent for those who want to transfer their balance (outstanding
\ncharge) from other credit card issuers.<\/p>\n
Amex, which is currently holding a sales promotion at Blok M
\nPlaza, South Jakarta, says that the balance transfer facility
\ncould save cardholders' interest payments by up to 50 percent.
\nThe interest rate offered by the bank is quite low when compared
\nto the 2.7 percent to 3.5 percent rates charged by other banks.<\/p>\n
HSBC's credit card holders are also offered a number of
\nbenefits, including a privilege program offering attractive
\ndiscounts at more than 2,500 retail outlets in the world. The
\ncardholders also get a reward point for every Rp 1,000 charged,
\nwhich can be redeemed for gifts or annual fees.<\/p>\n
Meanwhile, BCA offers a wide range of incentives, including a
\nfree lifetime membership fee if the average transaction made by
\ncardholders reaches 30 percent of their credit limit. The bank
\nalso offers an interest rate of two percent per annum for the
\nfirst six months and a free membership fee for the first year for
\nthose who transfer their balances from other card issuers.<\/p>\n
Bank Internasional Indonesia (BII) also offers something
\nspecial to its cardholders. Those who are members of its Platinum
\ncredit card, for example, are given a reward program in rupiah
\ncurrency, preferential treatment at selected merchants and
\naccident insurance worth up to Rp 5 billion.<\/p>\n
Country Manager for Indonesia Ellyana Fuad at Visa
\nInternational said the credit card business in Indonesia remained
\npromising, despite the growing competition.<\/p>\n
She said that the number of Visa cardholders continued to
\nincrease from year to year, despite tough competition from its
\nmain rivals MasterCard and American Express (Amex). Ellyana said
\nthe compound annual growth of Visa's membership during the past
\neight years had reached 28 percent, exceeding that of Asia and
\nthe Pacific as a whole.<\/p>\n
Visa, the world's leading payment brand, began its
\nbusiness in Indonesia in 1983. In Indonesia, there are now
\n16 banks that issue Visa cards, including Visa credit cards, Visa
\nElectron debit cards and Visa Travel Money.<\/p>\n
Visa cardholders in Indonesia reached 2.35 million by the end
\nof last year, an increase of 23 percent from 2001. \"In total,
\nthere are over 5 million Visa cardholders in Indonesia, including
\nVisa Electron and other Visa co-branded cards,\" she said.<\/p>\n
In terms of the total number of credit-card holders in
\nIndonesia in 2002, Visa had a market share of about 65 percent,
\nwhile in terms of transactions, its market shares reached 75
\npercent.<\/p>\n
\"By September last year, total Visa transactions
\nincreased by 54.6 percent compared to the same period
\nin 2001,\" she said, adding that her company planned to
\nincrease the number of merchants in Indonesia, in particular
\nsupermarkets, airlines, insurance companies and government-
\nrelated offices.<\/p>\n
Vice president and country manager Vadyo Munaan at MasterCard
\nInternational for Indonesia shared Ellyana's view on the
\npotential for the credit card market here.<\/p>\n
He said last year was a fantastic year for MasterCard, during
\nwhich it experienced a significant 46.88 percent increase in
\ntransaction value to US$0.86 billion in Gross Dollar Volume
\n(GDV), or GDV, and a 24.33 percent increase to 1.82 million in
\nthe number of issued cards.<\/p>\n
\"We have continued our success into the first three months
\nof 2003, with a 42.69 percent increase in GDV and 18.52 percent
\nincrease in the number of issued cards,\" he said.<\/p>",
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