Use your plastic and win fabulous prizes

Use your plastic and win fabulous prizes I. Christianto Contributor Jakarta

The credit card business has undergone a revolution in recent years, with issuers offering more incentives and benefits than ever to cardholders.

Previously, consumers had limited choices when applying for credit cards due to the small number of issuing banks.

The times have changed with the rapid growth in the country's card industry. As the competition is getting fiercer, issuers have no options but to offer more incentives such as lower interest rates and free membership fees to lure new customers.

In addition to such services, the issuers have also launched cash prize contests to enable them to compete in the tight market.

The credit card industry in Indonesia is still relatively new compared to those in developed nations. Although the number of cardholders is about four million at present, the future prospects are tremendous.

Data from the Indonesian Credit Card Association, credit card holders only made up 0.5 percent of the population. With its high population, Indonesia could, however, become one of the largest credit markets in the world, at least in Asia.

Many banks in Indonesia, both of local and overseas companies, are involved in the fierce competition to lure more credit cardholders and increasing transactions. Besides international names such as American Express, Citibank and HSBC, almost all major banks in the country such as Bank Central Asia (BCA), Bank Mandiri and LippoBank have undertaken serious efforts to capitalize on the growing credit card market.

Their fascinating promotion campaigns have significantly increased the number of new cardholders.

BCA, for instance, offers a program offering its credit card members to buy a DVD home player through an interest-free 14- month installment.

The members will also receive a purse with famous name-brand if they participate in the program.

The state-owned Bank Mandiri also offers a prize program designated for prospective members. It provides a drawing for newly-approved gold card members to win a prize of shopping worth up to the maximum limit of the card for three months. The prospective members, however, should have a deposit or savings account with a minimum of Rp 50 million, if they want to participate in the program.

American Express, the world's leading charge and credit card issuer, has also launched a marketing campaign offering a prize of free holidays and Jakarta-Singapore tickets. Under this program, American Express Card members are entitled to win a free holiday to Singapore.

All they have to do is to charge their expenses to the American Express card. Every time they use the card, they earn a chance to enter the lucky draw. There will be five lucky winners every week from Aug. 15 to Oct. 15 this year, offering a daily prize that includes two airplane tickets, accommodation (three days and two nights) and a 20 percent cash refund of up to US$200 for the largest purchase made with their American Express Card during the trip. American Express has launched prize programs since 2000.

"Competition is getting sharper. There are currently only 3.5 million credit cards, held by some 2 million people," said senior vice president personal financial services of HSBC Lily Budiono said.

Riko Abdurrahman, vice president marketing public Riko Abdurrahman, vice president marketing public relations of Citibank Indonesia, agreed that the market for credit cards in Indonesia was very promising.

He also highlighted the much higher potential of cardholders in Indonesia.

"It has a huge potential. The total bankable population is estimated to reach some 20 million. The total people eligible to have credit cards is between 8 million and 10 million," he said.

Most banks potentially share the same opinion, and that's why they are eager to have more cardholders, and that prize program is one of the efforts to see increasing members.

HSBC first launched a prize program in 2001 with a cash prize of up to Rp 1 billion (including 25 percent tax).

Currently, the bank offers a prize worth Rp 1 billion net, as HSBC will pay the tax for the winner. The program began on July 1 until 31 December 2002. Any payment with a an HSBC credit card worth Rp 100,000, will give the holder one point to participate in the draw. Meanwhile, a newly approved cardholder will have five points.

HSBC introduced its credit card in 1997. The number of issued credit cards has increased steadily from year to year.

"HSBC cardholders now total some 250,000, and it is expected to increase to 300,000 by the end of this year. Since the launching of the ongoing prize program last month, there have been 25,000 new cardholders," Lily said.

Citibank has also brought in many products and programs, for example Easy Pay and products offering various prizes such as VW Beetles. At present, it is holding three types of prize programs.

"Our program is a bit different compared to other card issuers. We focus on the existing card users. So this is really a program to show our appreciation to our loyal members," said Riko.

He said there were about 1.4 million Citibank credit card users in Indonesia, or about 35 percent of the total cardholders. The figure increases steadily by about 30 percent annually, he added.

The prize program held by Citibank offers a total of 32 WV Beetles. The ongoing program will end in January next year.

To participate in the program, Citibank credit cardholders should have a transaction of at least Rp 100,000 with their card to be eligible for the draw each month. Every transaction of Rp 100,000 will have a number for the drawing.

The winners are randomly selected based on numbers mixed in a drawing bin. Government officials from the Social Affairs Ministry, municipality and the public notary witness the draws which are generally held in public areas like shopping malls.

Credit cards offer the ease and convenience to the holders to make payments and withdraw cash with confidence wherever they are; whether at home, traveling abroad or at the mall. The issuers make this possible through a global network of acceptance locations and ATMs based on the latest IT developments.

With the prize programs, many cardholders want to try their luck to win the huge grand prizes. But remember that instead of winning the prize, card members may also become big, uncontrollable spenders and debtors.