Money talks,” thus reads the clever ad for the Alfa BlomMasterCard. And money talks all right, as this particularcard co-branded with the mobile phone operator offers thecard holder 60 minutes of free talk time upon issuing thecard and an additional 5 minutes for every $100 spent. TheBlom initiative is but the latest addition to Lebanon’s evergrowing number of credit cards and incentive schemes.
As general conditions and interest rates among credit cardsrarely vary, banks increasingly rely on loyalty programs andconsumer incentives to reward existing card holders, andattract new clients. Air miles, chocolate boxes, winebottles, coffee pots, hair dryers, watches and cashpaybacks: you name it, banks offer it … As long as you justuse that card.
For nearly 5 years, Blom has offered a more regular loyaltyprogram: as the card holder uses his card to purchase goods,he collects points that can be redeemed for gifts, varyingfrom kids toys to airline tickets. In addition, whenpurchasing at a selected group of retailers, heautomatically takes part in a kind of lottery and he maybecome the lucky winner of a lucrative gift. In Europe andthe US, using the credit card to pay for the smallest itemsis increasingly becoming the norm. Why not? Somewhere downthe line there will be an airticket.
According to Dr. Gladys Younes, head of BLOM’s Communicationand Investor Relations Department, the bank has longresisted entering the co-branded market, as it preferred towork with a group of retailers, rather than a singlepartner. “The telecommunication industry however, is aconsumer magnet in both Lebanon and in the world,” he said.“We have always viewed a co-branded card with a major telecom player as a partnershipthat can add major value. A brand like Alfa embraces acustomer database that is at least as big as ours.”
One of the lowest debts in the world inLebanon
The Alfa BLOM MasterCard is the first of its kind in theMiddle East and seems a perfect deal for all partiesinvolved, as it promotes purchasing and using the BLOMMasterCard, as well as subscribing to the Alfa classic line,instead of buying units.
Currently, there are an estimated 100,000 cardholders inLebanon, with an average credit debt of some $30 per capita,which is one of the lowest ratios in the world. As acomparison, in Saudi Arabia the average debt per credit cardholder is $161, in Britain $5,188 and in the United States$9,312. In other words, the Lebanese credit market still hasan enormous growth potential and it should not come as asurprise therefore that banks continue to launch new offersand incentives.
According to Philippe Hajj, Head of Fransabank’s RetailBanking Division, most credit cards offered by Lebanesebanks are quite similar. “What differentiates them is mainlythe cost, conditions, and benefit packages related to them,”he said. “That is the reason banks are reviewing theirpricing, while adding benefits to their cards.”
Fransabank recently launched its “Cash-Back” loyaltyscheme, which allows card holders to redeem the pointscollected by credit card purchases by cash money, which willbe credited directly to their cards upon their request. Forevery dollar spent, one gets a point, which in its turn isgood for $3 cents. Hajj emphasized however, that pointclients may still prefer to redeem their points at MEA,Aishti or MTC touch.
Standard Chartered Bank and Credit Libanais both offerelaborate gift schemes. Standard Chartered offers 100 pointsfor every $100 spent. With 5,000 points, the card holder canstart redeeming from a range of household items and othergifts. Credit Libanais offers 10 points for every $100spent. Rewards range from wine to travel insurance and evena home theater.
For its part, Byblos Bank has devsied the Cool Card. Nodoubt, aimed at introducing younger customers to thebenefits of credit cards, it offers retail discounts andenters cardholders into prize draws.
Incentive schemes well-received
According to Alain Hakim, assistant general manager ofCredit Libanais business and marketing development division,the bank’s incentive scheme has been well received, although“cardholders remain mostly oriented towards cash withdrawalrather than purchase settlement.”
Although a potential client would first look at a card’sinterest rate and charges, he may be tempted to opt for acredit card that promises him a reward, said Hakim. “Acredit card in need can be a friend indeed,” he said. “If acardholder can be disciplined enough to use his credit cardfor his day-to-day purchases, while keeping money aside to pay his bills atthe end of the month, then it can be a win-win situation.The savvy consumer can earn interest on his savings for thatmonth, while receiving cash back or free-of-charge incentives from the card provider.”
In addition to an elaborate gift scheme, Audi Saradar Bankrecently introduced an air mileage program. For every $100spent by Visa or MasterCard, the card holder gets 10 points.With 500 point he or she is entitled to a chocolate box,with 50,000 points a free air ticket to Amman or Cairo.
“Many institutions have implemented loyalty programs, yetfew have fully understood the nuances and challengesinvolved,” said Niovi Daoud of Audi Saradar’s CommunicationsDepartment. “Many believe a good loyalty program canvirtually run by itself, that once you’ve set it in motion,you can sit back and enjoy the ongoing success. In reality,we’ve found that programs should be continually modified inorder to fit clients’ lifestyles.” To do so Audi Bank offersdozens of different cards and incentive schemes.
Blom Bank’s Younes could not agree more with his Audi Bankcounterpart. “The US market, the world’s most developed interms of credit cards, is composed of 50% co-branded cards,”he said. “The Lebanese market has at least 15 co-brandedprograms. Are these 15 institutions in Lebanon capable ofgenerating enough volume? For a co-branded program to beprofitable, at least 3,000 cards should be generated andsold. Even more, should be generated if the co-branded cardis to have generous and often expensive features. That iswhy we find that many banks issuing co-branded cards aredoing so for prestige purposes rather than businessreasons.”
HSBC offers its Premier Credit Card holders 3 points forevery dollar spent, which can then be redeemed to acquireelectronics or luxury goods. However, to obtain a PremierCard one is required to have $75,000 in savings or have acombined credit balance of home loan, savings and otherassets of at least $100,000.
According to HSBC’s Cards Executive, Omar Farhat, thebank’s loyalty and incentives program is not meant to be arecruitment program, but meant to reward existing clientsand thus build up client loyalty.
“We try to differentiate our card from others mainly throughour services,” he said. “So, we offer card holders a24-hours help desk worldwide, as well as a travel insurancethat meets requirements for a Schengen visa. In addition tothe points scheme, we occasionally do special campaigns, inwhich we offer card holders such things as cinema or concerttickets.”
Music to their ears!