Credit cards battle for customer billings
By Doris Dumlao
Philippine Daily Inquirer
First Posted 04:53:00 04/25/2008
Filed Under: Financial & Business Services
In this era of cutthroat competition in the credit card business, the battle among lenders has shifted from merely enlisting new members to becoming the card of choice and increasing customer billings.
Competing for the same pool of spenders, who usually have two or more cards in their wallets to choose from, and targeting a specific market segment is now the name of the game. Embracing the mass affluent market as a niche, SB Cards Corp. recently launched a new Security Bank Platinum Mastercard that comes with an array of rewards oriented toward the “good” lifestyle.
“The credit card market players will be going after building utilization of their respective card base rather than building its membership base, depending on the size of their respective business,” says Andrew Cajucom, chief of marketing and business development at SB Cards Corp.
He points out that the number of card issuers in the Philippines has grown to 15—consisting of local and foreign banks—while the qualified (or so-called bankable) population has not increased as fast.
According to the latest central bank data, the banking system’s credit card receivables rose by 16.5 percent in 2007 over a year ago, driven by strong consumer spending in the country.
But aside from increasing customer billings, the credit card industry is working harder to make sure these spenders pay their dues. In the last three years the number of delinquent accounts has been declining, Cajucom says.
For every P1 of credit card exposure at present, about 14.2 centavos turn sour, but this has declined from over 20 centavos years ago, based on BSP statistics.
“The card issuing banks have also been working on upgrading their credit processing and collections units to ensure that the quality of the accounts generated are better as compared to the early years of the industry,” Cajucom says.
“The top four card companies, which own about 60 percent of the market, will now look at offering programs that would build billings,” Cajucom says.
For its part, SB Cards has a 4-percent market share in terms of card base and 10 percent in terms of billing.
“We intend to further increase this share by introducing new products as well as maximizing profitability for each account through a portfolio segmentation approach,” Cajucom says.
The Security Bank Platinum Mastercard credit card, for instance, carries a dual currency billing option, concierge service, free travel insurance, high credit limit, worldwide acceptance and other incentives. It also comes with a wide array of rewards.
“We are looking at the upper middle class, the middle managers or executives, the entrepreneurs as the main target market for the new Security Bank Platinum MasterCard. The features we built in the card are designed to fit their needs,” Cajucom says.
Cardholders who will use their Security Bank Platinum MasterCard from April 16 to July 15 will earn rewards based on the amount of purchases.
SB Cards’ support unit, he points out, has been recognized as one of the best in reliability and accessibility in Asia Pacific by a leading card issuing company. Platinum cardholders can expect that same level of quality service, Cajucom says.
“At this point in time, portfolio segmentation is the best approach when doing credit card marketing programs. We realize that different customers have different requirements and we have to be sure that the right product offer is given to the correct customer segment.”
SB Cards, he says, has recently beefed up its system capability to support this segmentation strategy.
As far as innovations are concerned, the cards industry is seen to harness state-of-the-art technology to improve card acceptance and reduce fraud.
“Slowly we are seeing wireless point of sale terminals being rolled out so that card transactions are no longer limited to within store premises but also for food delivery, on site repair services etc.,” Cajucom says.
“There will be enhancements in the product that would also address fraud prevention. Technology would play a key role in the future of this product.”
There are three to four million credit cards holders in the Philippines. Citibank remains the largest credit card firm in the country with about 1.2 million cardholders followed by HSBC with one million. Metrobank Card Corp. has 870,000. SB Card has 200,000.
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