CASHING IN ON CREDIT
Banks partner with popular brands to promote credit cards
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Klaudia Tothova, marketing manager for Master Card, shows off a credit card bearing the National Geographic brand.
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By
Frantisek Bouc
Staff Writer, The Prague Post
November 4th, 2004
Every man in the Czech Republic is said to be a fan of either Sparta or Slavia. For credit card company CCS, the enthusiasm for soccer and fans' traditional loyalty to the country's most famous clubs have become a lucrative business opportunity.
In December 2003 CCS teamed up with soccer powerhouse Sparta Praha to introduce a Sparta-brand debit card. By catering to supporters of the country's most famous soccer club, CCS is attempting to further boost its image on the rapidly growing credit card market.
"Soccer is followed by masses of people, and Sparta has been the biggest and most famous Czech club," CCS General Manager Patrik Dada said.
The decision to issue a Sparta credit card also served to popularize credit cards with the general public, Dada said. "Co-branded cards enable providers to target specific groups and people for whom usual universal payment cards do not appeal," Dada said. "Issuing co-branded cards is an effective way to further spread [payment-card use]."
While CCS' move would have been considered rare a few months earlier, branded credit cards are quickly becoming a hit in the banking industry. Development of the credit market in Eastern Europe is heading toward incresed use of credit cards, and branded cards in particular, said David Redheffer, an analyst with the reseach company Opinion Window RI.
"In order to enhance the appeal of debit cards, financial institutions offer ever more sophisticated features. Now there are over 5.3 million debit cards in circulation compared with about 60,000 branded credit cards," Redheffer said. "Recently, the major banks and insurance companies have further intensified their efforts."
Spending more
While branded credit cards have been available here since 1994, only some 20 projects have been developed so far, said Klaudia Tothova, MasterCard Europe's marketing manager for the Czech Republic and Slovakia. CCS' partnerships with Sparta, Citibank's branded card with Eurotel and Ceska sporitelna's card with the Cedok travel agency are among the best-known examples.
The Czech Republic lags behind its neighbors in the issuing of credit cards in conjunction with popular brand-name products and companies, Tothova said. In contrast to the rest of the European Union, where the share of payment cards per person is 1.4, a mere 6.6 million payment cards have been issued among the Czech Republic's 10.5 million people as of the end of June.
With the overall volume of credit cards issued in this country far below the EU average, the market appears wide open to credit companies. "This is just the right time," Tothova said. "With holiday shopping just around the corner, branded cards give companies a good opportunity to make themselves visible and also attract clients to spend more. It's a proven fact that holders of branded, or affinity, cards tend to spend more money than usual credit-card holders."
Raiffeisenbank reported payments on affinity cards issued together with National Geographic last spring are 30 percent higher than other cards.
While branded cards help carriers earn discounts at certain businesses, use of affinity cards generates contributions to nonprofit organizations.
Raiffeisenbank Product Manager Petr Sladek said the bank pays 360 Kc [$14.50] per card every year to the National Geographic Research and Development Fund. Raiffeisenbank has issued more than 2,000 affinity cards.
Charging ahead
NAME GAME
Increase of branded cards in Europe:
• 2000: 1,321
• 2001: 1,668
• 2002: 1964
• 2003: 2,309
Percentage of branded card programs by country/region in 2003:
• UK: 36 percent
• Turkey: 33 percent
• Spain: 15 percent
• Italy: 7 percent
• Scandinavia: 5 percent
• Switzerland: 2 percent
Source: MasterCard
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The number of payment cards in the country increased by 1 million to 6.4 million last year. And the number of issued cards further grew to 6.6 million at the end of June, the Bank Cards Association reported.
In 2003 Czechs spent nearly 78 billion Kc using payment cards, compared to 42.5 billion Kc the year before.
In conjunction with the increase in credit cards, banks have also been installing more automated teller machines (ATMs). Last year the number of ATMs in the country went up by 300 to a total of 2,700. The number of credit cards in the country doubled to 200,000 at the end of 2003.
In contrast to the rest of the EU, where the share of debit and credit cards is about equal, credit cards in this country make up only some 4 percent of all payment cards. Opinion Window RI's Redheffer said the reason for the preference of debit cards comes down to the trouble banks have had in the past with recovering bad debts.
"Difficulties in verifying credit histories and the popularity of direct deposit for wages favored rapid debit-card growth here," Redheffer said.
According to data compiled by MasterCard and Visa, Czech payment-card holders more often pay with cards in retail stores abroad than in the Czech Republic. At home they're most likely to use cards for cash withdrawals from ATMs.
The use of debit and credit cards in retail stores accounts for 30 percent of the total volume of transactions inside the country. Cash withdrawls make up the remaining 70 percent. The numbers are reveresed among Czechs traveling abroad.
Ceska sporitelna is the leader in the number of cards issued (2.6 million), ahead of Komercni banka (2 million) and CSOB (1.5 million).
Starting in 2005 all cards will have integral microchips for increased security. Of the large domestic banks, only CSOB and Komercni banka offer cards with security chips so far. At the end of June, CSOB had issued 1.1 million chip-equipped cards. Komercni banka had issued 514,000 such cards.
The country's credit- and debit-card market, controlled by MasterCard and Visa, is not yet saturated, said Miloslav Kozler, manager for the Czech Republic for Visa Europe. Six of 10 Czechs carry a credit or debit card. Within three to five years the number of cardholders is expected to grow to 10.5 million -- or one card for every person in the country.
Reader's Comments:
[27/02/2005] : Would like to comment on E. Rail's article about Siemens S65 phone. The writer did not mention anything about IR port (I realize it is hard to mention all of the options/specs but I think IR port is an important one). I have the phone for almost 2 months now and the IR port is VERY convenient. It is SO EASY to transfer data from the phone to my notebook, equiped with IR port.
Quote: "Some of the ring tones are surprisingly shrill and uncool for a top-of-the-line device, and a number of the phone's color themes are equally goofy."
Maybe ring tones are not that cool but to tell the truth I listened to them only once. Yes, only once, the day I got the phone. Then, I downloaded a lot of ringtones to my notebook and transferred them easily to the phone through IR port. Now I have the coolest ring tones and even songs in .wav format. Also, there are a lot of themes available online that you can download and change easily. I did not change the default one (yet) because I like it. Maybe after I get tired of it I will change it to something new. Also, downloaded a lot of java games and successfully transferred to the phone, again through IR port.
My previous phone was a CDMA phone - therefore no SIM card. I had to transfer all the numbers to the new S65 phone. The process was a breeze thanks to Mobile Phone Manager software (downloaded for free from Siemens web site) and again, IR port.
There are many other positive things about S65. I did some "googling" before I purchased it. I am very satisfied with Siemens S65 mobile phone no matter what others say! ;-)
Nazar Kharivsky
United States | [20/02/2005] : Quote from Brian O'Reilly Boston, NY
"In my opinion, the only way to fix the problem between the 2 cultures [West and Islam] is to for us to accept that we are all humans regardless of our religions."
I thought that only Europeans are naive...
paragon large
USA | [18/02/2005] : It seems curious that the "West" is downplaying the horrors of Communism that were committed between the years of 1919 and 1953 in the former Soviet Republics and later in Easter Europe. Whereas the Nazi Reich lasted only twelve years and killed some ten million, the brutal Soviet Communist State lasted over seventy years and killed probably three times as many. Joseph Stalin and his multi-ethnical NKVD henchmen have starved millions of innocent Ukrainias and deported and worked to death many millions more of every nationality and walk of life. And although thousands of real people did the communist killings, guarded the communist concentration and labor camps, and ran the Soviet communist police state, there are no household names and the history of the perpetrators available and/or published in the West. Therefore, it seems to me that the East Europeans who did suffer under Communism do have the moral high ground in Brussels when they bring up, discuss and compare the known Nazi tyrany with the past and relatively unpublicized Communist terror.
Paul Zellman
Los Angeles, California | [10/12/2004] : Sir, what a tangled web we all weave. Those of us that oppose the E.U are gearing up for a show down with the politicians. As the people of your great country will knwow the vast majority of UK citizens are against this so called new constitution and if the exit polls are to be believed if there was a vote tommorow Great Britain would almost certainly veto it! This of course would mean the whole idea is srcapped and no doubt we would be labelled yet again as the thorn in the europeans side. I notice from your Prague Post vote that the Czech people would vote for such an ammendment - all be it narrowly - so it would seem that there is strong sceptisism with your people as well as my own. Earlier this year a met a good man, his name is Martin (Fishar) and he is from Prague. He has become one of my greatest true friends and we have had many a disscussion late into the night over this whole subject. Indeed, both he and his then girlfriend were at my house on the stroke of midnight when the Czech Republic officially became a member of the E.U. They raised a glass in celebration - and why not? I understand that our two countries are very differnt. But, we also have great things in common, the main one being PRIDE. Just because i am anti the E.U does not mean i am anti Europe. Indeed as far as i am concerned it is the finest continent on earth, and that is precisely why i am so against the forced changes imposed on us all on an almost regular basis. One passport, one currency and even maybe soon one army. This is not what we joined for back in 1974. It was supposed to be a free trade market where everything and anything would be cheaper and easily available. Instead, thanks to both France and Germany it is swiftly becoming a superstate, designed in my mind to challenge the might and authority of America. This must end, and quickly. We have all become pawns at the mercy of Brussels. In your own E.U Referendum within the pages of PraguePost 8.3% of those who have so far voted have declared they would abstain. I would say to those that when you have to decide for real PLEASE search your hearts and consciences - your futures, not just you but your childrens children will one day look back in history and decide wheather we made the right decissions. I only hope that we can look them in the eye and honestly say yes, we did. Matthew Puddy, 31.
Mr Matthew Puddy
Lyme Regis, Dorset. United Kingdom | [09/12/2004] : Oh for the days of Bill Clinton. He had "style". He could smoozz the Euros, tell them everything they want to hear----and then-----do nothing. From Kyoto to South American drug problems. Why on the very last day of his presidency, he pardoned a known drug lord. Now I call that "style". In Bush, similiar to Reagan, he tells you what he intends to do and does it. That is so foreign to the European mind and Euro's present leaders. The truth is if the Russians wanted to walk over Europe the combined armies of Europe could not stop them without using nucular weapons or draft guest workers. In the light of the UN corruption scandal, who knows who are the bad guys or who are the good guys. No one needs to go see American movies. Truth is, I think almost all are too juvenile for my taste. Yet the french and Germans and others seem to like them. I'm not sure what that means. There is not enough room for me to go into the wider view of the world situation and how this plays out to the present situation. Perhaps seeing Moore's F 911 one more time will help the European intelligencia see the situation clearer.
Dusan Lipensky
Wheaton, United States | [02/12/2004] : Regarding the article "West Meets Middle East", I just found it quiet interesting on how muslims have been generalised into one category which is "terrorists". I understand why the writer is concerned about the differences in culture between the two, but aren't also budhism, shintoism, and hinduism? I think in this day and age, newspapers and writers have a great pleasure in villifying someone for their success in.
An interesting point I found out is how selfish the writer was when he said: "Intellectuals uttering attacks on Islam may seem distasteful to many but they help spur debate that can ultimately be healthy". While he stated earlier:"France has taken some steps, seeking to train responsible imams who will teach a version of Islam that is respectful of the republic." Now I agree that some Imams need to be removed if they do spur revolution, but in western society today any imam(or any middle eastern) can be easily jailed/deported if he/she says anything against the residing country. That is for the simple reason that islam is viewed as a danger by westerners. In my opinion, the only way to fix the problem between the 2 cultures is to for us to accept that we are all humans regardless of our religions.
Brian O'Reilly
Boston, NY |
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