Product and Pricing Strategies in Asia Pacific Plastic Cards

Table of Contents

• Overview
  • Catalyst
  • Summary
• 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