Page 29 - Sphere No.21 (Mar 2008)

SPHERE 27
major credit card. Hotels insist on swiping a card on checking
in, car rental companies will not entertain a booking without
having card details and airlines increasingly expect clients to
pay by credit using on-line booking.
“Credit card usage has been steadily increasing year on year
and we are seeing the introduction of new credit cards and new
products,” says Mr Beatty, a Senior Consultant with Aconite, a
UK-based cards consultancy, who has been working with DBS as
Programme Manager for the ComPass New Proposition Project.
“There are so many different kinds: credit cards, prepaid cards
and debit cards. Also there is more acceptance worldwide – you
can use Visa anywhere and travelling is one of the biggest areas
of usage. The whole industry is less parochial, there are fewer and
fewer domestic-only schemes. I think it can go a lot further.”
An entire generation of young people has grown up know-
ing nothing but credit cards and on-line payments. To them,
cheques are something their parents use. The travellers cheque,
once a vital part of any overseas expedition, has already be-
come a museum item.
The credit card boom also heralded the arrival of the con-
sumer-driven, live-for-today society, where there is no shame
in paying for goods in installments. That acquisitive streak has
generally helped to fuel global growth.
“To a certain extend the credit card has freed up the consump-
tion power of people,” says Professor Raymond So, Associate Pro-
fessor of the Chinese University of Hong Kong’s Department of
Finance. “I think younger people are more willing to embrace
new things and use credit cards as a way of doing business. I
think older people tend to use them more as a way to
defer payment. But they will never replace cash.”
Credit card usage worldwide gradually became more
common during the 1980s but the basic concept is far
from new. The first formal card – as opposed to mer-
chants letting customers put goods on the slate – was
introduced in 1914, when the American company
Western Union introduced a metal plate that allowed
its favoured clients to make deferred payments.
The next major development, in the middle of
the century, was the introduction of the Diner’s
Club card, essentially a charge card that allowed
business people to notch up travel and entertain-
ment expenses without carrying cash around.
The key drivers of credit-card growth in more
recent times have been Visa, American Express
and MasterCard. The companies’ technical research
also led to more sophisticated cards: the old-style im-
print taken by a machine was replaced by the electronic strip
which cut transaction time to seconds and, more recently, by
an embedded chip.
ComPass Visa, a joint venture between DBS Bank and
Hutchison, launched the world’s first EMV compatible chip-
based programme 12 years ago and offers multiple rewards for
customers, including Hong Kong’s first instant cash rebate loy-
alty programme that covers a broad spectrum of HWL Group
merchants, including supermarkets, telecommunications pro-
viders and healthcare stores. It underwent a major revamp in
2006 that introduced a raft of new features and gave cardhold-
ers greater security and more loyalty rewards.
Planning the new cards and implementing their introduc-
tion is a major operation.
“A new product such as this takes up to two years of planning
with a core team of more than 15 people and up to 50 others
involved in different stages of development,” says Samuel Yung,
Vice President, New Business Initiatives, DBS Bank.
The truly cashless society may never come, but the credit-
card dependent society, with billions of dollars transacted daily,
has already arrived.
COMPASS POINTS THE WAY
HONG KONG’S love of
convenience and technolo-
gy ensures that credit cards
are part of what makes the
city tick.
The city has a population
of over 6.9 million, with
some 3.4 million eligible to apply for a card. Of those,
some half a million people in Hong Kong have a Com-
Pass Visa card in their wallet – an extraordinarily high
penetration rate.
What’s more, these customers will soon benefit
from a partnership between ComPass Visa and ESDlife,
Hutchison’s lifestyle Internet portal.
ESDlife, launched in 2002, provides a one-stop shop
portal where the public can access a variety of public
and commercial information and services. ESD life’s wed-
ding portal gets more than 550,000 visits every month
and a recent survey by the City University of Hong Kong
showed that 93 per cent of Hong Kong to-be-weds visit
ESD life for wedding information.
In late March, ComPass Visa will partner with ESDlife
to build a wedding theme mini-portal and create a spe-
cial club with offers that range from wedding
banquets to wedding photos and even
honeymoon travel.
ComPass Visa will offer special rates
for pre-approved cash lines, temporary
credit limit increases and other ser-
vices to its customers.With projected
spending of HKD10.1 billion in the
wedding industry this year, these spe-
cial offers will surely be a boon for
the happy couples.
The strategic alliance
between ComPass and
ESD life will be extend-
ed to other life stages
such as babies, new
homes and children’s
funds.