Money talks,” thus reads the clever ad for the Alfa Blom MasterCard. And money talks all right, as this particular card co-branded with the mobile phone operator offers the card holder 60 minutes of free talk time upon issuing the card and an additional 5 minutes for every $100 spent. The Blom initiative is but the latest addition to Lebanon’s ever growing number of credit cards and incentive schemes.

As general conditions and interest rates among credit cards rarely vary, banks increasingly rely on loyalty programs and consumer incentives to reward existing card holders, and attract new clients. Air miles, chocolate boxes, wine bottles, coffee pots, hair dryers, watches and cash paybacks: you name it, banks offer it … As long as you just use that card.

For nearly 5 years, Blom has offered a more regular loyalty program: as the card holder uses his card to purchase goods, he collects points that can be redeemed for gifts, varying from kids toys to airline tickets. In addition, when purchasing at a selected group of retailers, he automatically takes part in a kind of lottery and he may become the lucky winner of a lucrative gift. In Europe and the US, using the credit card to pay for the smallest items is increasingly becoming the norm. Why not? Somewhere down the line there will be an air ticket.

According to Dr. Gladys Younes, head of BLOM’s Communication and Investor Relations Department, the bank has long resisted entering the co-branded market, as it preferred to work with a group of retailers, rather than a single partner. “The telecommunication industry however, is a consumer 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 partnership that can add major value. A brand like Alfa embraces a customer 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 parties involved, 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 a comparison, 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 has an enormous growth potential and it should not come as a surprise therefore that banks continue to launch new offers and incentives.

According to Philippe Hajj, Head of Fransa bank’s RetailBanking Division, most credit cards offered by Lebanese banks are quite similar. “What differentiates them is mainly the cost, conditions, and benefit packages related to them,”he said. “That is the reason banks are reviewing their pricing, while adding benefits to their cards.”

Fransa bank recently launched its “Cash-Back” loyalty scheme, which allows card holders to redeem the points collected by credit card purchases by cash money, which will be credited directly to their cards upon their request. For every dollar spent, one gets a point, which in its turn is good for $3 cents. Hajj emphasized however, that point clients may still prefer to redeem their points at MEA, Aishti or MTC touch.

Standard Chartered Bank and Credit Libanais both offer elaborate gift schemes. Standard Chartered offers 100 points for every $100 spent. With 5,000 points, the card holder can start redeeming from a range of household items and other gifts. Credit Libanais offers 10 points for every $100spent. Rewards range from wine to travel insurance and even a home theater.

For its part, Byblos Bank has devsied the Cool Card. No doubt, aimed at introducing younger customers to the benefits of credit cards, it offers retail discounts and enters 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 withdrawal rather than purchase settlement.”

Although a potential client would first look at a card’s interest rate and charges, he may be tempted to opt for a credit card that promises him a reward, said Hakim. “A credit card in need can be a friend indeed,” he said. “If a cardholder can be disciplined enough to use his credit card for his day-to-day purchases, while keeping money aside to pay his bills at the end of the month, then it can be a win-win situation.The savvy consumer can earn interest on his savings for that month, while receiving cash back or free-of-charge incentives from the card provider.”

In addition to an elaborate gift scheme, Audi Saradar Bank recently 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, yet few have fully understood the nuances and challenges involved,” said Niovi Daoud of Audi Saradar’s CommunicationsDepartment. “Many believe a good loyalty program can virtually 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 in order to fit clients’ lifestyles.” To do so Audi Bank offers dozens of different cards and incentive schemes.

Blom Bank’s Younes could not agree more with his Audi Bank counterpart. “The US market, the world’s most developed in terms of credit cards, is composed of 50% co-branded cards,”he said. “The Lebanese market has at least 15 co-branded programs. Are these 15 institutions in Lebanon capable of generating enough volume? For a co-branded program to be profitable, at least 3,000 cards should be generated and sold. Even more, should be generated if the co-branded card is to have generous and often expensive features. That is why we find that many banks issuing co-branded cards are doing so for prestige purposes rather than business reasons.”

HSBC offers its Premier Credit Card holders 3 points for every dollar spent, which can then be redeemed to acquire electronics or luxury goods. However, to obtain a PremierCard one is required to have $75,000 in savings or have a combined credit balance of home loan, savings and other assets of at least $100,000.

According to HSBC’s Cards Executive, Omar Farhat, the bank’s loyalty and incentives program is not meant to be a recruitment program, but meant to reward existing clients and thus build up client loyalty.

“We try to differentiate our card from others mainly through our services,” he said. “So, we offer card holders a24-hours help desk worldwide, as well as a travel insurance that meets requirements for a Schengen visa. In addition to the points scheme, we occasionally do special campaigns, in which we offer card holders such things as cinema or concert tickets.”

Music to their ears!