Elie Abou Khalil,
Head of Retail Products Development Department, Byblos Bank
Byblos Bank started a card business a while ago. In 1998, we launched, together with the ABC department store in Dbayeh, the ABC Blue Card. It was a joint Byblos Bank-ABC card. The card was designed specifically for the retailer. It works only for purchasing at the ABC malls, not for ATMs. The card has a preferential interest rate, so the customer can either pay 100% of his due with no interest payment or as little as 5%-10% and then the interest charged will be preferential – one of the lowest rates in the market. Cardholders benefit from special offers at ABC. In the event of discounts, cardholders can benefit from them a few days before everyone else. ABC also informs cardholders about anything that is new.
When Byblos Bank launched the card, credit card programs were not as common as today. The card was launched amid a very aggressive marketing campaign and was a big success. The number of cardholders increased, because the conditions of acceptance and so on were better than those in the market in general. It was very good. We had a substantial number of cardholders. More recently, in 2004 and 2005, although we still have the card and it is active with the cardholders, we are seeing more and more of a trend towards international branded credit cards. The customers are showing a preference for one card that can be used at different points of sale. Even though the two main ABCs constitute two of Lebanon’s most important department stores, we’re seeing a trend in the market in which customers are moving towards one card that they can use anywhere and not at one specific outlet, with which they can withdraw cash, and which they can use on the internet. Today, the ABC card is an additional card. It’s not the only one you have in your wallet. We have around 1,000 ABC cards in circulation. We have had some cancellations, but the number of ABC cards in use is still at an acceptable level.
We won’t stop offering the card. There will always be demand for specific retailer and proprietary cards, from people who like to shop at ABC. It’s becoming more of a loyalty card belonging to the two institutions rather than a regular card offered everywhere. Cards of this type will continue to exist because of the extra benefits – the special offers, promotions, brochures, and information. A lot of cardholders, especially females, still want this card.
The card is for everyone, but the balance is towards females, the shoppers. Females in general like shopping. It’s a hobby. That’s why the tendency is more towards female than male, and towards an age group of 21 to 40, 45. That’s the main target customer base. The limit on the card starts at $500 and goes up to $10,000 for important customers. Usually it’s around $2,000 to $3,000.
Initially, we had to educate the consumer because people were mainly cash users and to a lesser extent check users, so when they got the card we had to teach them how to use it and take advantage of the benefits, and how to pay a portion of their balance and finance the other. It was a learning curve. Today, we see from the market that most cardholders, and especially the younger targets for the ABC card, know how to use the card.
The default rate for retailer cards is higher than for regular cards. That’s how it is everywhere in the world and Lebanon is no exception. It’s customer behavior, probably because the terms and conditions for retailer cards are looser because you cannot offer the card only to high net-worth individuals. The acceptance criteria are looser. That’s why you have the higher default rate. It’s still acceptable though. It’s around 40 or 50% higher than for the regular cards.
4Randa Bdeir,
Senior Manager, Electronic Banking & Business Development, Bank Audi
We have a collection of credit cards called the Banque Audi Card Collection, grouped under the slogan ‘Enjoy.’ It’s the Enjoy Credit Card Collection. We use the word ‘Enjoy’ because the credit card is always attached to enjoyment. You use it for travel, shopping, to rent a car. Within the collection we have five categories: Enjoy the Luxury; Enjoy the Classic; Enjoy the Convenience; Enjoy the Lifestyle; Enjoy Amex; and Enjoy the Colours. The products within each category conform to the category title. So in Enjoy the Convenience we have an internet credit card. We have not only segmented the social pyramid by income but have also created a cross-section of segmentation according to behaviour and preference. For example, for cigar lovers we have the Montecristo Visa Platinum. They get cigar-related gifts with it. The behaviour and preference segmentation is now the fashion all over the world. It’s no longer about whether or not someone is rich. Even if people aren’t rich, but have certain preferences, you target them.
The Shine Card is part of the Lifestyle Category. It targets women who like to look at themselves. The card is a mirror. You can’t find it anywhere else in the world. Bank Audi invented it. It is made exclusively for us. In order to have the mirror made we had to deal with a lot of security issues with Master Card, involving the chip that is in the card. It had to be moved. The woman can take the card, look at herself, put on lipstick, and give it to the waiter. It is two-in-one. We have also attached to it a lot of benefits of interest to women. They involve spas, makeup, powder, body treatment, and lingerie. We have agreements with about 10 or 15 partners who deal with products that interest women, for example the spa and health club at the Phoenicia Intercontinental, the Nautilus health club, Diesel Jeans, and AIZone.
The card was released on 29 March. We invited 300 ladies to a big party, a brunch at the Eau de Vie restaurant at the Phoenicia. I gave a presentation about the ‘shining’ women of the world, in seven categories, including: Political leaders; Sexy and Glamorous; Successful Businesswoman; and Sporty Women. I named some of the most famous women in the world in each category. So for example under Sexy and Glamorous I put Marilyn Monroe and Brigitte Bardot. For Political Leaders I put Condoleezza Rice and Margaret Thatcher. Under Businesswomen I put Martha Stewart. Then we asked women which of the ‘shining’ women they would like to be, held a draw, and gave away ‘shine-related gifts, like a cell phone, an expensive nightgown, and an iPod for ‘sporty’ women. Everyone got a gift bag as well with expensive makeup and so on. Some of the guests are our clients, some are friends, and some are potential clients.
I chose the mirror and the word ‘Shine,’ because usually when you look at yourself you want to shine.
Our branches have said the card has been a success so far. We launched it a few weeks ago, and so far we have issued two or three hundred. I don’t want to distribute too much, not more than 1,000.
There are women who care a lot about their femininity and those who don’t. I am targeting the woman who cares about her femininity, who likes to go to spas, who likes to have a mirror in her bag. I’m targeting not just any woman, but specifically that kind of woman.
The limit on the card can be anywhere from $500/month to $500,000/month. We don’t care. You find very rich women who have millions of dollars and are like nuns. They wear eyeglasses. They never look at the mirror. They don’t care about powder. And sometimes you find a secretary who makes $500 a month, but who every five minutes looks in her mirror, and puts on lipstick. It’s all about ‘the woman in you.’ Sometimes you’re rich and don’t have a woman in you. Sometimes you’re very poor but have a woman in you. Purchasing power is of course very important but by targeting preference, lifestyle and behaviour as well, you target all customers.
Some men have said: Why have you created this card for women and nothing for us. I said: You have the Montecristo card. They said: We don’t smoke. So I should start targeting men with something they like. I have to innovate. I will see. I observe people. I am a very sociable person. I go out a lot. I have many friends. Until now I have been observing women. From now on I will begin to observe men.
4Antoine Raad,
Deputy General Manager, Information Technology Division, Credit Libanais
We are one of the major issuers of Master Cards and Visa Cards. We also deal with some local and loyalty cards. We were the first to issue credit cards in Lebanon, in 1985. We started to issue cards in our branch in Cyprus. The card at that time was aimed at a certain segment of the population – at those who traveled and would use it abroad. Starting in 1992, we made a very big effort to get outlets here to accept Visa and Master Cards. This, in conjunction with the increased number of ATM machines, allowed banks here to issue credit cards and people to use them. Today, a total of around 1.2 million cards have been issued in Lebanon, which is a significant number compared to other advanced countries. It shows that banks have improved their card portfolios and are linking them to different retail products. It has enhanced the retail banking sector.
We offer different retail credit card products. We have different programs with different merchants based on loyalty programs. You can accumulate points in some places. And you can redeem the points within the different outlets. Or you can redeem them according to a catalogue of products, like travel tickets, gifts, utility products and so on. There are two different possibilities: We have specific merchants who have their own loyalty cards and we are linked to them, and we have our card on which you can accumulate points every time you use the card, and redeem them. Credit Libanais deals with around 8,000 merchants, and we have equipped around 6,700 of them with ATM machines.
Banks are now converting to retail products. Today, people are educated and are asking for the cards. Also, the policy of the government to transform all salary payments from cash to bank transfers into domiciliated accounts has helped enhance this trend.
There is very strong competition, just like with other products in the banking sector. We compete on a variety of aspects: interest rates, fees, and other indirect revenue. We also compete on quality of service and variety of product, by addressing different segments.
We also have co-branded cards which are specifically retail cards. Credit Libanais is co-branded with Metro for example. These cards are a specific product used only inside certain retail outlets. For them, the conditions are slightly different. The loyalty program allows you to redeem from the same retailer. The limit for those cards is from $300 to $700. We don’t have a higher default rate on them than on other cards because we apply the same criteria for applicants.
4Manager Personal
Financial Services, HSBC
HSBC’s internet credit card was launched in 2001. It is named the “In-Site” Virtual Card and was created specifically for use in remote shopping environments like the internet, and for mail order and telephone order transactions. It offers interest-free credit for up to 56 days. For security reasons, our internet card has a low limit, does not have a magnetic strip or a signature panel, and cannot be used at retail outlets or for cash advances. We also monitor unusual activity on the card and may contact the customer to verify a suspect transaction. All purchases are insured against loss, theft or accidental damage for up to 30 days from the day of receipt. There is also the offer of free supplementary cards and standing instructions for automatic debit from the HSBC account to cover a specified repayment percentage of between 5% and 100% of the outstanding credit card balance.
Lebanon, like other markets, has witnessed growth of internet usage. Along with internet usage comes e-shopping. However, Lebanese people rarely shop online from Lebanese retailers. Online shopping transactions more likely relate to product orders from overseas, due to pricing or product availability.
Currently, we are witnessing an expansion of online shopping, for example in the domain of virtual online agencies. Even existing retail businesses and airlines are encouraging their customers to shop online by reducing the fees of online shopping.
Online shopping can not be performed without an internationally-accepted credit card. That is why an internet credit card is essential for customers who would like to shop online. Other customers need their internet credit card to register for certain exams online, to pay memberships for certain online clubs, or subscriptions to international publications.
The availability of the card complements HSBC’s drive towards alternative delivery channels, particularly Personal Internet Banking, which witnessed 100% growth in penetration during 2005.
Global online shopping is witnessing an increase in the number of customers. For Lebanon, it is still limited. Globally, 28% of internet users have either shopped online or plan to do so in the next six months. The United States has the greatest proportion of online shoppers, with 32% of internet users shopping online.
If customers follow the safety instructions dictated by the internet Credit Card and hardware/software protection, online shopping is secure. Trusted sites are the key. There are certain security measures that the customer has to take before entering any personal data on the website.
HSBC In-Site Virtual Credit Card stresses the security issue, and has been designed with maximum security features to give the customer both the convenience and the peace of mind of secure online shopping. In addition to the card’s safety features, like the low limit, the absence of a magnetic strip, etc, we have a special team dedicated to monitoring any unusual or suspected transaction on the credit card.
4Georges Aouad,
Head of Retail Banking Division, Bank of Beirut
We offer three kinds of cards: debit cards, deferred payment cards; and revolving credit cards. The debit cards are known here as Visa Electron cards. Any purchases are debited directly to your account. If you have money in your account you can use them. They can be used for cash withdrawals and for purchases at points of sale worldwide. This kind of card was developed by Bank of Beirut. If someone’s salary is domiciliated at Bank of Beirut and fits our criteria, he is automatically granted four times his salary as an overdraft on his account.
Another kind of debit card is the shopping card, which was developed under the same system by Bank of Beirut. We named it shopping card because usually people use that kind of card only to withdraw cash. Of the Visa Electron cardholders, 80% use it to withdraw cash from ATMs. The Shopping Card was developed under the Visa Electron scheme. You can use it the same way, to withdraw cash from an ATM, and to pay for purchases in shops. We developed it as a shopping card because we wanted to divert the attention of our clients away from the Visa Electron concept towards a shopping card concept, telling them that they can also do their shopping with the card. It has been a very successful card for Bank of Beirut.
We have around 45,000 Visa Electron cards including the shopping cards. The shopping cards were recently developed, and we currently have between 10,000 and 12,000 in circulation. There remains big potential for the shopping card. You must recall that we are a retail-oriented bank, so we target institutions, large companies, in the public and private sectors. So when we acquire 1,000 employees from one public institution, we have gained 1000 visa electron cards. There is no limit. We have an aggressive retail banking strategy. We expect card numbers to rise significantly. The only difference between the deferred payment card and the shopping card is that if you don’t have the available funds you cannot use your shopping card.
The shopping card and Visa Electron cards are available to lower income persons.
A person with a monthly income of $500, for example, can have a shopping card, with a limit of four times his salary, if he has been employed for two years.
In an innovative scheme, the shopping card can be linked to our savings accounts. So if you have a savings account with us you don’t have to open a current account to have the shopping card with a pre-approved limit of $1,000.
