Abstract
Overview
Introduction
Product and Pricing Strategies in Asia Pacific Plastic Cards reviews a number
of product and pricing strategies used in Asia Pacific. Product strategies
examined include different forms of loyalty schemes, alternative card forms
and designs, as well as niche products. Pricing strategies examined include
low rate pricing and differential pricing.
Scope
- Covers product strategies including loyalty schemes, innovative design,
niche targeting and new technologies
- Analyzes pricing strategies including low rate, low fees and differential
pricing to different customers
- Includes case studies from Australia, New Zealand, Malaysia, Singapore,
Hong Kong, South Korea, China and India
- Based on interviews with leading card executives in Asia Pacific
Report Highlights
Datamonitor has identified cards targeted towards women in Singapore, Hong
Kong, Malaysia, Thailand, India, China, Japan and Philippines. Most of these
card offerings have been launched in the last five years. Cards targeted
toward women differ from standard cards in terms of design, loyalty schemes
and benefits.
In the wake of the RBA interchange reforms of 2003, Australian credit card
issuers were challenged to find a new business model. As interchange fee
income was reduced, card issuers responded by cutting back on loyalty schemes
and offering low rate cards to compete.
All else being equal, the more cards a cardholder holds the more important low
annual fees are. Also, annual fees are more important for transactors, as fees
are unavoidable unlike interest rate payments. Another disadvantage is that
low fee cardholders may be less likely to ever use the card at all.
Reasons to Purchase
- Understand the key trends in credit card product and pricing across Asia
Pacific
- An invaluable tool for card issuers wanting to improve the profitability
of their business
- Learn from the experience of your competitors which product innovations
are most effective
Table of Contents
- Overview
- Executive Summary
- Product strategies in Asia Pacific
- Loyalty schemes can increase both customer acquisition and retention
- Reward point programs are a popular way to reward loyal customers
- Cashback programs exist in many Asia Pacific countries
- Co-branded card loyalty schemes can provide greater utility from a
single card
- Multi-retailer loyalty programs form networks between retailers
- Card design has become an important product differentiation strategy
- Targeting specific customer segments can increase profitability
- Premium cards have a long history in the market
- Cards targeting women tap into a growing market
- Affinity cards can target virtually any group of customers
- New technologies will improve convenience, security and loyalty schemes
- Chip-based cards will offer better security and loyalty schemes
- Mobile payments and biometrics have the potential to render the
physical card obsolete
- Pricing strategies in Asia Pacific
- Some card offerings compete on the basis of price
- Low rate cards attract revolvers
- Low rate cards are common in Asia Pacific
- Lower fees appeal to customers with several cards
- Some providers offer different rates to different customers
- Tiered pricing involves lower rates for higher card usage
- Risk pricing offers better rates to lower-risk customers
- Delinquency pricing entails higher rates if a customer has defaulted
- Table of Contents
- Table of figures
- Table of tables
- Product Strategies in Asia Pacific
- Loyalty schemes can increase both customer acquisition and retention
- Reward point programs are a popular way to reward loyal customers
- Case study: unused reward points in South Korea
- Case study: point-based loyalty schemes have declined in Australia
- Case study: rewards out of this world in the US
- Cashback programs exist in many Asia Pacific countries
- Case study: innovative Indian cashback schemes
- Case study: combining gold with cashback in Malaysia
- Co-branded card loyalty schemes can provide greater utility from a
single card
- Case study: net-linked credit card targets youth segment in Hong Kong
- Multi-retailer loyalty programs form networks between retailers
- Case study: New Zealand multi-retailer loyalty scheme with a
co-brand credit card
- Card design has become an important product differentiation strategy
- New card designs have been introduced in Asia Pacific
- Case study: Visa Mini in Asia Pacific
- Case study: MasterCard launches the world' s first map-shaped credit
card in Taiwan
- New colors, images and textures can make the credit card a personal
fashion statement
- Case study: sparkling credit cards in South Korea
- Card designs are set to become even more futuristic
- Case study: the American Express Butterfly card
- Targeting specific customer segments can increase profitability
- Premium cards have a long history in the market
- Case study: premium cards in China
- Cards targeting women tap into a growing market
- Case study: competition for female card customers in Singapore
- Affinity cards can target virtually any group of customers
- Case study: affinity cards in Malaysia
- New technologies will improve convenience, security and loyalty schemes
- Chip-based cards will offer better security and loyalty schemes
- Card security is a big area of concern for consumers
- Case study: virtual Visa vouchers in Australia
- Mobile payments and biometrics have the potential to render the
physical card obsolete
- Mobile phone payments have been launched in Japan
- Biometric payments have been launched in Singapore
- Mobile and biometric payment technologies both hold vast potential
- Pricing Strategies in Asia Pacific
- Some card offerings compete on the basis of price
- Low rate cards attract revolvers
- Low rate cards are common in Asia Pacific
- Case study: low rate cards in Australia
- Lower fees appeal to customers with several cards or light users
- Lower fee cards are available throughout Asia Pacific
- Some providers offer different rates to different customers
- Tiered pricing involves lower rates for higher card usage
- Risk pricing offers better rates to lower-risk customers
- Case study: the Malaysian central bank introduces risk-based rate
ceilings
- Delinquency pricing entails higher rates if a customer has defaulted
- Case study: Affin Bank Berhad introduces delinquency pricing on low
rate cards
- APPENDIX
- Data tables
- Definitions
- Balances outstanding
- CAGR
- Cash rate
- Charge card
- Credit card
- Debit card
- EFTPOS
- Interchange fee
- PIN
- Revolvers
- Transactors
- Methodology
- Further reading
- Ask the analyst
- Datamonitor consulting
- Disclaimer
- List of Tables
- Table 1: Low rate strategies have different advantages and
disadvantages
- Table 2: Schedule for ABN AMRO cashback rates, November 2007
- Table 3: Schedule for ICICI Bank cashback rates, January-March 2007
- Table 4: Cashback schedule for Citibank Cashback Gold Card,
November-December 2007
- Table 5: Low rate strategies have different advantages and
disadvantages
- Table 6: Several Australian card providers offer ongoing rates below
10% per annum, November 2007
- Table 7: Most major Australian banks offer a no fee credit card
- Table 8: The Citibank Clear Card offers an interest rate of 9.99% for
the biggest spenders
- Table 9: Preferred credit card rewards in Asia Pacific
- Table 10: Total reward point value and forfeited points in South
Korea, 2004-07 (KRWbn)
- Table 11: Average benefit of reward point schemes in Australia, 2003-07
- Table 12: Proportion of respondents that agree with the statement "My
credit card is a status symbol"
- Table 13: Proportion of respondents that rate "Security features/fraud
prevention" as very important when choosing a card
- Table 14: Total outstanding balances and credit limits on credit and
charge cards in Australia, 2002-07 (A$bn)
- List of Figures
- Figure 1: Characteristics of different payment card partnership models
- Figure 2: Loyalty schemes can be organized in several different ways
- Figure 3: 57% of respondents chose cash rebates as their preferred
credit card reward, 2007
- Figure 4: The total value of outstanding reward points in South Korea
increased to KRW1.4 trillion in 2007
- Figure 5: Australian rewards schemes have become less attractive,
2003-07
- Figure 6: Characteristics of different payment card partnership models
- Figure 7: There are different approaches to marketing the Visa Mini
card
- Figure 8: The Union Bank Travel Card is shaped after the map of Taiwan
- Figure 9: The GK Power luxury diamond-embedded credit card
- Figure 10: The American Express Butterfly card folds into half and
fits in a small carrying case
- Figure 11: In China, 78% of respondents agree with the statement "My
credit card is a status symbol"
- Figure 12: The UOB Lady' s Card comes in Regular or Platinum
- Figure 13: The DBS Woman' s Card has a moderately feminine design
- Figure 14: Both Visa and MasterCard have developed contactless card
payment systems
- Figure 15: In Malaysia, 49% of respondents named security features and
fraud prevention as the most important factor when choosing a card
- Figure 16: Pay By Touch lets consumers pay by using their fingerprint
- Figure 17: Cardholders are spread across a spectrum based on how often
they incur interest
- Figure 18: Total outstanding balances on credit and charge cards have
almost doubled in five years, 2002-07
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