A new study shows that creating successful card programs in the Asia-Pacific region will lie in effective market segmentation and a strong understanding of consumer needs. The research also shows that the maturing credit and debit markets in Asia/Pacific have created an environment ripe for well-positioned, innovative co-brand card programs. In recent trend analysis conducted by MasterCard Advisors, the exponential growth in the debit and pre-paid market in the region was highlighted, with the number of cards and average transaction value doubling over the past two years. Credit cards have showed steady growth since the first quarter of 2001, with the number of credit cards in the region up by 40%. However, the average transaction values on credit cards decreased by 25% in the same period.
MasterCard is partnering with the Pacific Asia Travel Association to sponsor two awards as part of PATA’s “Young Tourism Professionals” initiative for 2004. The “Young Tourism Strategist of the Year Award” seeks to identify the best young executive in the Asia/Pacific travel industry through a 2,500-word essay on one of a variety of industry related topics. The “Face of the Future Award” recognizes a young professional who is an upcoming “star” in the industry. The PATA Honours Committee will shortlist and pick the winning essay and MasterCard will award the author with a US$5,000 research grant and will also
sponsor the winner’s air travel and accommodation. The award will be presented at PATA Travel Mart 2004 in Bangkok.
Bank credit card issuers based in Singapore continue to post a 20% increase in monthly charge-offs compared to last year. However, losses in August remain well below June’s $17.5 million, a twelve year high. According to the Monetary Authority of Singapore, credit card issuers wrote-off $15.7 million in August compared to $13.1 million one-year ago. Much of the rising losses this year were due to the outbreak of SARS, which sacked the local economy. According to the MAS, bank credit card issuers lost $14.0 million in May, $15.6 million in April, $13.6 million in March, $13.7 million in February, and $12.1 million in January. The total number of cards in the country at mid-year was 3.3 million, which included 2,295,027 primary cards and 992,555 supplementary cards.
United Overseas Bank Ltd. has launched a “VISA Mini” credit card and a “VISA Infinite” credit card. Applicants for the miniature VISA card are entered into a contest to win a “MINI” automobile. Applicants receive 10 chances to win when they apply, and one extra chance with each $50 outstanding on the statement. UOB is giving away a “MINI One” or “MINI Cooper S.” The bank is also offering various electronic gadgets for referrals. UOB says it expects to issue 100,000 “VISA Mini” cards by next September. Meanwhile, UOB has launched its exclusive “VISA Infinite” credit card. Reportedly, UOB is targeting 4,000 of Singapore’s affluent for the card. UOB also indicated it will roll-out “VISA Infinite” cards in Hong Kong, Malaysia, and Thailand over the next two quarters.
MasterCard International has launched a miniature card in Asia-Pacific that is capable of using contactless chip technology. The new “MasterCard SideCard,” which appears similar to the “Discover 2GO” card, flips out from its ergonomic plastic casing, and it can be swiped through any point-of-sale terminal. The “Discover 2GO” card, issued in the USA, is not smart card or contactless card ready. Also, the U.S.-issued Bank of America “Mini VISA” card is not smart card ready. MasterCard says it has received significant interest from members to launch the “SideCard” across the Asia/Pacific region.
Retail sales growth in most Asia/Pacific markets is poised to recover from the devastating impact of SARS. According to the inaugural “MasterIndex of Retail” forecast released by MasterCard International, China is poised to lead in year-on-year percentage growth, with healthy growth expected from Thailand, Indonesia, the Philippines, Australia and New Zealand. Marginal growth is anticipated in the remaining markets with the exception of Korea and Singapore, which can expect to see retail sales shrinking over the next six months. The forecast for the second half of the year revealed that China tops the region for retail sales growth with forecasted 6.8% year-on-year growth. Taiwan shows healthy signs of recovery from the outbreak with an expected 4.8% growth. Even in Hong Kong, marginal growth of 0.8% is predicted over the same period last year. South East Asia shows a positive outlook, with retail sales in Thailand, Indonesia and Philippines forecasted to expand by 5.5% year-on-year, and Malaysia expected to grow by 0.5%. Singapore, whose consumers are still pessimistic, is the only market in this sub-region that is anticipated to decline by 1.5%. Korean consumers deepening pessimism manifests itself in the expected 2.5% retail sales contraction over the second half of last year. Japan is forecast to grow by 0.3% year-on-year. The Australia and New Zealand retail sectors are looking reasonably strong with anticipated 3.3% and 2.5% year-on-year growth respectively.
Bank credit card issuers in Singapore reported the highest monthly level of charge-offs in twelve years. During June card issuers lost $17.5 million, bringing total charge-offs for the first half of this year to $86.5 million. The rising losses were driven in the second quarter by the outbreak of SARS. The government recently reported that Singapore’s economy contracted by 11.8% in the second quarter, the worst-ever. According to the Monetary Authority of Singapore, bank credit card issuers lost $14.0 million in May, $15.6 million in April, $13.6 million in March, $13.7 million in February, and $12.1 million in January. Card volume for the first six months of this year has fluctuated between $2.4 billion and $2.5 billion. The total number of cards in the country at mid-year was 3.3 million, which included 2,295,027 primary cards and 992,555 supplementary cards.
The Pacific Asia Travel Association and MasterCard International have launched an outbound travel forecast tool for the Asia/Pacific region. The “MasterIndex of Travel in Asia/Pacific” will provide six-month outbound forecasts for 12 key Asia/Pacific markets: Australia, China, Hong Kong, Indonesia, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore, Taiwan and Thailand. The forecasts will be built on three pillars: 1) the MasterIndex of Consumer Confidence 2) MasterCard’s Asian Lifestyles twice-early report designed to monitor business and personal travel trends across the Asia/Pacific region, and 3) PATA’s database of outbound travel statistics. PATA provides leadership to the collective efforts of nearly 100 government, state and city tourism bodies, over 55 airlines and cruise lines, and hundreds of travel industry companies. In addition, thousands of travel professionals belong to more than 70 PATA Chapters worldwide.
Thailand and India manifested the largest increases in consumer confidence from six months ago, while China and New Zealand remained optimistic, albeit at slightly reduced levels, while consumers in Japan, Korea, Taiwan and Hong Kong remained pessimistic. The Asia/Pacific region has been hard hit this year with the outbreak of SARS and the spillover effects of the war in Iraq and the threat of terrorism. The findings come from MasterCard’s “MasterIndex of Consumer Confidence” survey which studies 13 markets in Asia/Pacific. MasterCard International previously reported that its gross dollar volume declined in the Asia/Pacific region for the first time. During the first quarter of this year, MasterCard’s gross dollar volume dipped 6.8% to $54.2 billion. Card volume in South Korea particularly declined for all card issuers as the country continues to deal with huge charge-offs. MasterCard said ThailandÂs rise to the top place in consumer optimism in Asia/Pacific is a direct reflection of the economyÂs ability to generate strong income and employment growth from its domestic sector, especially in consumption related activities.
MasterCard International reported that its gross dollar volume declined in the Asia-Pacific region for the first time. During the first quarter, MasterCard’s gross dollar volume dipped 6.8% to $54.2 billion. One year ago, the gross dollar volume was up nearly 18% in the first quarter. This year, purchase dollar volume declined 1.37%, while cash advance dollar volume declined 13.19%. Card volume in South Korea has declined sharply for all card issuers as the country continues to deal with huge charge-offs. MasterCard also reported that the number of accounts and cards in the region grew 8% in the quarter. With over 144.1 million “Maestro” cards, Asia/Pacific was the second largest “Maestro” region at the end of the first quarter. The number of “Maestro” cards in the region rose 14.4% over first quarter 2002.
Bad credit card debt continues to soar in Singapore as charge-offs reached a record $15.6 million in April. In March card issuers lost $13.60 million, in February $13.70 million, and during January $12.10 million. According to the Monetary Authority of Singapore, the credit card loss rates for this year are running 70% over 2002 figures. However, card volume for the first four months of this year has fluctuated between $2.4 billion and $2.5 billion. The total number of cards in the country at the end of April was 3.3 million, which included 2,283,126 primary cards and 979,846 supplementary cards.
American Express is launching an ad campaign and special incentives to encourage Singaporeans to get out of their homes and start spending again following the SARS epidemic. Meanwhile, HSBC Bank Malaysia reported this week that its credit card volume plunged 20% since the outbreak in mid-March. Most credit card issuers serving the Singapore market have reported a 25% decline in credit card volume during April, however, there are indications that volume rebounded by about half in May, to bring the year-over-year decline to about 15%. American Express announced earlier this week it will launch a $15 million “Step Out and Spend” advertising campaign, to be spread out over the summer months. AmEx also announced a dining promotion to award triple points between June 2nd and September 30th on top of previously announced dining discounts. A few weeks ago AmEx began offering discounts of up to 50% off at many restaurants in Singapore. The Singapore Tourism Board also is launching a major advertising campaign as well as special discounts to visitors. There are currently four million VISA and MasterCard payment cardholders and 400,000 American Express cardholders in Singapore.