Going beyond the free toaster as competition tightens

Going beyond the free toaster as competition tightens

JAKARTA (JP): As competition among credit cards grows fiercer,
card issuers have begun to offer gifts and rewards to attract
members or encourage holders to use their cards more often.

The gifts range from a simple pen to an all-inclusive trip to
Christmas Island.

American Express (Amex) is an example.

With 38,000 card holders in Indonesia, Amex is currently the
most used charge card in the country. However, since most of its
card holders have more than one card -- they average three to
four cards -- Amex must push its members to use its card.

A reward program was launched early last month. The launching
made Indonesia the 22nd country in the world to implement Amex's
membership rewards program.

"Unlike other banks, we offer a lifestyle by presenting those
who use our cards with real rewards like an all-inclusive package
to Christmas Island," Roy Tan Hardy, the director for marketing
and sales for Amex Travel Related Services Indonesia, told The
Jakarta Post.

The program allows card members in Indonesia to earn a point
for every Rp 2,500 (US$ 1) they charge to their account. The
points can be accumulated to procure the 40 lifestyle rewards
available. Some of the rewards include movie previews, dinner for
10 at the Oasis restaurant, a P&O Spice Island cruise, a free
round of golf at selected championship courses, savings on BMWs
and Cherokee Jeeps, an all-inclusive Christmas Island package,
two nights in an executive suite in selected first-class resorts
and a Eurail Pass for two.

But the rewards cannot be earned automatically. A card member
must first enroll and choose between the frequent flyer program
and the non-traveler option.

Frequent Traveler

Besides basic rewards, members who choose the frequent flyer
option can earn free flights through Passages, which cooperates
with Amex and is the largest frequent flyer program in Asia.

Passages currently includes Cathay Pacific Airways, Malaysia
Airlines, Singapore Airlines, Swiss Air, Silk Air, Delta Air
Lines, British Airways, Austrian Airlines and All Nippon Airways.

Accumulated points can be used to supplement the Passages
points. A free air ticket can be obtained after 40,000
kilometers.

"If your points have accumulated to 69,000, for example, and
your Passages points have reached 36,000, a total of 4,000 points
can be transferred to the Passages points so that you can get a
free air ticket," explained Roy.

A frequent stayers program will be launched soon, said Roy.
The program will allow members to earn points for free rooms at
Sheraton or Westin hotels around the world.

"We also offer an unique experience. In the U.S., one of the
rewards is a half-hour flight in a MiG jet fighter. In Indonesia
we're going to offer what our card members want to experience. We
may, for example, present bungy-jumping in Bali," Roy pitched.

Indonesian card holders can get the prizes offered by Amex
offices in the other 21 countries.

Expatriates can also transfer points they have accumulated in
other countries to Indonesia.

"We're not telling our customers to spend more, we only ask
those who still like to use cash or cheque to replace them with
plastic," said Roy, adding that in other countries the reward
program usually boosts spending by 28 to 64 percent.

Diners

Gifts are also considered important by Ida Laksmi Shanty,
director of PT Diners Club Indonesia, the sole franchisee of
Diners Club International, Amex's competitor.

"Gift giving is probably the only way to compete in this
business," said Ida. "Therefore, it is common that one issuer's
creative idea in gift giving is soon copied by other issuers."

Like Amex, Diners also offers rewards to its faithful members.
The rules are the same. Members get one point for every Rp 2,500
they spend. But unlike Amex, which offers lifestyle rewards,
Diners also gives things like pens. The gifts are provided for
both Diners' charge card holders and credit card members.

Diners also cooperates with airlines grouped in the Passages
program. The cooperation permits Diners 90,000 members, both
charge and credit card holders, access to free tickets.

Pens or glass sets are available so "those whose monthly
average spending is around Rp 100,000 ($44.05), still can at
least get a pen for a souvenir," Ida said, adding that many
housewives are also interested in accumulating the points to win
household appliances like a refrigerator or an oven.

To compete, Diners also organizes an installment payment
program which enables its members to purchase certain products on
credit. Members can pay the purchase in three installments
without having to pay interest.

Good service is Diners' emphasis, insists Ida, adding that
Diners focuses on serving businesspeople who frequently travel
and entertain.

Therefore members who travel can use Diners' special airport
lounge facilities which are available in many international
airports, except, unfortunately, Indonesia. The purchase and
delivery of tickets is all made simple.

Travel insurance is also available. The scheme includes
medical care, the transportation of a body back to the country of
origin and a ticket for an accompanying person.

Diners Club Indonesia began a birthday program. Members
receive cards on their birthdays, complete with a list of
restaurants or hotels which offer special discounts for people
celebrating a birthday.

"The response last year was very good. I even received a
letter from a tycoon who expressed his gratefulness for the
program," said Ida. She added that this year the program has not
run quite as well because of the change in Diners' management.

"But next year, everything will run as usual," she promised.

Citibank

Enny Hardjanto, the marketing and service director for
Citibank Card Products, said that Citibank's best service is
basically what the bank offers to its MasterCard and Visa
holders.

"Citibank has a 24-hour customer service which serves all
customers wherever they are," Enny told the Post.

Therefore, she said, it's not Citibank's policy to attract new
card members with gifts. However, those whose applications for
MasterCard or Visa are accepted before April next year will be
able to buy a pair of watches for Rp 85,000.

Members are also entitled to a gift program called Home Sweet
Home if they introduce Visa or MasterCard to their friends. For
every application accepted, members get one point. The points can
be accumulated and exchanged later with gifts which include
electronics, furniture and sports equipment. The points can also
be exchanged for money.

"If you're not lazy and have a little spirit, it's easy to
accumulate the points," insisted Lisa, an employee of a
multinational company in Central Jakarta, who received an alarm
clock radio for introducing one of her friends early this year.

Citibank's card members, about 500,000 in Indonesia, also have
access to 90,000 banking machines around the world. (als)