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.