Credit Card Market in Bangladesh Executive Summery Owning a Credit Card is a basic right of a Qualified Financial Services Consumer. So in today’s banking world there is no even any one bank without this modern but necessary facility. It is a key operation of the new banking system. All the bank’s account holders are now enjoying this facility with great appreciation. All the banks are now trying to give the most hassle free and comfortable system to enjoy the facility. These facilities are under E-Banking system. As the world is becoming like a village now-a-days, people are also trying to the most attach with that, where credit card is a beautiful symbol of it. With this modern world we are walking. So there are also different types of credit card facilities in our banking arena with various new and upgraded facilities. Here we try our best to make a picture of their facilities. Introduction
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Credit Card Market in Bangladesh
Executive Summery
Owning a Credit Card is a basic right of a Qualified Financial Services Consumer. So in
today’s banking world there is no even any one bank without this modern but necessary
facility. It is a key operation of the new banking system. All the bank’s account holders are
now enjoying this facility with great appreciation.
All the banks are now trying to give the most hassle free and comfortable system to enjoy the
facility. These facilities are under E-Banking system. As the world is becoming like a village
now-a-days, people are also trying to the most attach with that, where credit card is a
beautiful symbol of it.
With this modern world we are walking. So there are also different types of credit card
facilities in our banking arena with various new and upgraded facilities. Here we try our best
to make a picture of their facilities.
Introduction
The 'credit card', though a new phenomenon in business and transaction arena which had
already won the hearts of millions across the globe, has set its foot in this part of the world
with its magical power and becoming a way of life here by offering its handy feature and
usefulness. In the advent of Information Technology and globalization, now shoppers need
not worry about money, all they need is willingness and a credit card to buy anything they
want at any places across the 'Global Village'. Worldwide access, acceptability and popularity
as well of credit cards have rose to such an extent that it is now posing a threat to theory of
old 'hard-cash' possession of currencies amid growing sense of insecurity worldwide. The
forward march of 'plastic money', the other name of the credit card, is so rapid that the whole
concept of monetary system needs immediate review as it has put a question mark in the very
existence of paper money.
The main benefit to each customer is convenience. Compared to debit cards and checks, a
credit card allows small short-term loans to be quickly made to a customer who need not
calculate a balance remaining before every transaction, provided the total charges do not
exceed the maximum credit line for the card. Credit cards also provide more fraud protection
than debit cards. Additionally, carrying a credit card may be a convenience to some
customers, as it eliminates the need to carry any cash for most purposes.
In our country credit card service is becoming more and more popular day by day.
Banking and Credit Card in Bangladesh
Financial sector of Bangladesh, like most developing countries, is dominated by banking
enterprises. The commercial banks in Bangladesh are catching up fast with the rest of the
world in terms of the use of the most advanced technologies. Starting from online banking
and SMS banking, we have also seen the arrival of innovative technologies like the mobile
ATM and many more. Credit/Debit Cards: Once a status symbol, the use of Credit/Debit or
ATM Cards has now become an absolute necessity for the urban folk of Dhaka and other
major cities of the country. With most of the commercial banks offering card services and
with relative ease of making one compared to earlier times, Cards have become immensely
popular for account holders ranging from university students to CEOs of corporate firms.
Former ANZ Grindlays Bank, now Standard Chartered Grindlays Bank, took a pioneering
role in introducing credit card in Bangladesh. It started acquiring Visa and Mastercard nearly
10 years back. In the first few years, its operational area was very limited and concentrated
only on the large hotels and restaurants. In 1997 the bank decided to launch full-scale card
operation and very realistically brought a wide range of people under its service system. It is
now giving a wide range of card services through multifarious quality facilities.
Some of banks providing Credit card facilities in our country:
Standard Chartered Grindlays Bank Bank Asia Ltd.
Exim Bank Ltd.
NCC Bank Ltd.
Janata Bank Ltd.
South East Bank Ltd.
Eastern Bank Ltd.
Marcantile Bank Ltd.
Eastern Bank Ltd.
National Bank
Premier Bank
BRAC Bank
City Bank
IFIC Bank
Dhaka Bank
Commercial Bank of Ceylon
Credit Card Market in Bangladesh
6. Credit Card Brands
Bank Credit Card BrandsBank Asia Ltd VISA Card
MasterCardCommercial Bank of Ceylon VISA CardExim Bank Ltd. VISA card,
Master card.NCC Bank Ltd VISA CardJanata Bank Ltd. Q-Cash Credit Card.Marcantile Bank Ltd. VISA CardNational Bank VISA CardPremier Bank VISA CardJamuna Bank Ltd. Q-Cash
VISA CardBRACBank VISA CardCity Bank VISA CardIFIC Bank VISA CardDhaka Bank VISA CardDutch Bangla Bank Lt. VISA Card
Master Card.
Form the above information we found that most of the Bank in our country provide Visa
card and Master card service. Some of the bank use Q-cash card service. Bt Visa and
Master card is much more popular.
2.Types of Credit Card offered
Bank Types of Credit CardBank Asia Ltd VISA Gold (Dual)
VISA Classic (Dual)VISA Local Gold VISA Local Classic or SilverVISA Tuntuni
NCC Bank Ltd Classic LocalGold LocalGold International
Janata Bank Ltd. Only one credit card brand: Q-Cash which is a locally used credit card. No international credit card.
Eastern Bank Ltd. Simple Credit CardLife-Style CardCool CardEBL Travel Card
Marcantile Bank Ltd. Gold, Classic.Types of card – Local, International Dual currency card.
BRAC Bank VISA Classic : LocalVISACold: LocalVISA Clssic: Dual Universal Classic CardVISA Gold: Dual/ Universal Gold Card
City Bank VISA Local ClassicVISA Classic DualVISA Gold LocalVisa Gold Dual
IFIC Bank VISA Classic LocalVISA Gold LocalVISA Classic InternationalVisa Gold International
Dhaka Bank Dual Gold (International )Dual Classic (International )Local Gold (Only in Bangladesh )Local Classic (Only in Bangladesh ; Limit below tk. 50,000 or more than tk. 50,000 )
Every Bank which provides credit card service having mainly two types of service :
1. Gold 2. Classic
These two types are local and international card, Local Gold and Local Classic , and
Universal Gold and Universal Classic . Card limits of different banks varies. Janata Bank
provides local credit card service only. But other Private Banks provide local and
international card service.
3. Number of card holders over years
A credit card is a great financial tool. It can be more convenient to use and carry than cash,
and they offer valuable consumer protections. Paper money and coin are risky and
burdensome for carrying. One can avoid the toll of finger-counting changes in this system.
Dollars, Pounds or Taka can be plundered, lost or stolen. In case the card is stolen or lost the
clients' bank will issue a fresh card.
Bank Asia Ltd.
Date 15/11/2009 31/12/2008 31/12/2007 31/12/2006 31/12/2005Number of Cardholder
4500 3500 3000 n/a n/a
The mission of Bank Asia Ltd. is to set high standards of integrity and bring total satisfaction to their clients. According to their mission that to create satisfaction among client they introduce credit card and the chart shows that the number of their credit card holders increased day by day.
Exim Bank Ltd.
Date 31/12/2009 31/12/2008 31/12/2007 31/12/2006 31/12/2005Number of Cardholder
Now total 3000
Only 800
NCC Bank Ltd.
Date 31/12/2008 31/12/2007 31/12/2006 31/12/2005 31/12/2004
Number of Cardholder
1876 1730 1732 1024 N/A
NCC Bank has launched its Visa Credit Card Service on August 22, 2005 and within 2008 umber of their cardholders are increasing trend.
Dutch-Bangla Bank Ltd.
Date 31/12/2009 31/12/2008 31/12/2007 31/12/2006 31/12/2005Number of Cardholder
Now total 2000 members
Janata Bank Ltd.
Date 30/10/2009 31/12/2008 31/12/2007 31/12/2006 31/12/2005Number of Cardholder
157 150 - - -
Mercantile Bank Ltd.
Date 31/12/2008 31/12/2007 31/12/2006 31/12/2005 31/12/2004
Number of Cardholder
10950 6051 3212 N/A N/A
Dhaka Bank
Date 31/12/2008 31/12/2007 31/12/2006 31/12/2005 31/12/2004Number of Cardholders
6898 5188 5327 5177 4830
IFIC Bank Ltd.
Date 31/12/2008 31/12/2007 31/12/2006 31/12/2005 31/12/2004
Number of Cardholders
60000
Jamuna Bank Limited
Date 31/12/2008 31/12/2007 31/12/2006 31/12/2005 31/12/2004Number of Cardholder
13000 7000 5500 2500 Nil
The Premier Bank Limited
Date 31/12/2004 31/12/2005 31/12/2006 31/12/2007 31/12/2008Number of Cardholder
3,000 2,500 2,000 3,000 12,000
Every Bank has an increasing trend in their number of credit cardholder. It refers that the credit card market in our country is expanding day by day. People of our country are becoming more used to this facility as it is less risky than paper money.
4. Income and expenditure of card division over years:
Date 31/12/2008
31/12/2007 31/12/2006
31/12/2005 31/12/2004
Bank Asia Ltd
Revenue (Taka )
Tk. 4 crore Tk. 1.5 crore
- n/a n/a
Exim Bank Ltd
Revenue (Taka )
1 crore taka(expected).
This was preliminary stage so no revenue can be calculated.
No service charge for using ATM booths of Janata Bank Ltd.
Tk 15 per transaction –BRAC Bank Ltd.
Tk 20 per transaction –Dutch Bangla Bank Ltd.
Mercantile Bank Ltd.
Fees and Charges Gold int’l- $ 70 annually
Classic int’l - $35 annually
Gold local- 1800Tk. annually
Classic local-900 Tk. annually
- Late payment charge Tk.250 per month
- Over limit Tk.350
Dhaka Bank
ees and Charges
Local Classic: Taka. 1000
Local Gold: Taka. 2000
Dual Classic: Taka. 2000
Dual Gold: Taka. 3000
9. Target Customers
Sophisticated people,
business man and
MNC Service holders
Bankers
Corporate client companies and
their employees
Financial Institutions, Doctor,
Engineer, University Teacher,
Multinational Company, Govt.
high officials.
Private Organization Service Holder
Govt. Organization Service Holder Doctor Engineer
o and other service holder who is capable to hold the credit card.
10. Customer Appraisal Procedure
Different Banks use different Customer Appraisal Procedure :
Customer Phone Verification (CPV)- a procedure of custimer’s given information
Income or salary statement checking Must be a customer of any branch of their bank Description of the movable and immovable assets, other bank loans and
liabilities of the applicant In case of business man last six months transaction statement is repuired (in
Janata Bank) Declaration from the applicant whether they take loan from other sources
Banks assess risk based on the information provided by the person wants to be the card holder.
11. Limit determination Procedure
Determination of Limit varies bank to bank and also customer to customer. To determine the limit of the credit card
No. Banks years Amount 2007 2008 2009
1 Bank Asia Ltd Around 0.025% of the profitability of the bank
2 Commercial Bank of Ceylon
N/A
3 Exim Bank Ltd. 0.33% 1 crore & 10 lakh
4 NCC Bank Ltd 4 crore5 Janata Bank Ltd. Around 2
lakh6 South East Bank
Ltd. 1.61% of profit
7 Eastern Bank Ltd. N/A8 Marcantile Bank
Ltd.5%
9 National Bank N/A10 Premier Bank 3-5% of total profit11 Jamuna Bank Ltd. 20%12 BRACBank 35% 4%13 City Bank N/A14 IFIC Bank N/A15 Dhaka Bank .25% .50% 1%16 Dutch Bangla
Bank Ltd.Not calculated yet
Mainly it depends on the monthly salary or income of the customer. Sometimes customer’s status is also taken into account.
Generally limit is around 1.2- 1.5 times of the income of the customer. For business people, the limit may cross 1.5 times of income depending on the level of risks.
Social Status is also important issue
Dutch Bangla Bank Ltd. has one internal procedure system. First they collect some
information from various sources about internal, external, financial, historical and
also family matters .And than rank this information out of 100.
12. Contribution of credit card to the total profitability of the organization:
We can see that, Brac bank has 35% profit from credit card division which is larger than any other bank of our list because it has more card facility than any other bank in our country. In amount NCC bank has its more profit than any other bank .
13. Features to be added to address the changing need of customers
No.
Banks Features
1 Bank Asia The bank has introduced VISA Tuntuni which has fixed limit of Tk 20,000 to meet the needs of middle income people.Issuance of checks in VISA card (already prevalent in MasterCard).Providing VISA Dual cards to more customers, rather than selected people.There is a strategy to attract plastic cards customers of other banks called ‘Soft turn’, through which the bank provides more limit. But it requires customer to surrender
2 Commercial Bank of Ceylon
They are coming with all latest facilities in the card.
3 Exim Bank Ltd.
smartly purchase any product
4 NCC Bank Ltd
N/A
5 Janata Bank Ltd.
VISA MembershipNew ATM Booths installationNetwork creationNetwork sharingMinimum payment of monthly credit by customers will be 5% from current 8%.Additional establishment of POS (Point of Sale)
6 South East Bank Ltd.
At the moment, the bank is not moving towards implementing any such features or innovation.
7 Eastern Bank Ltd.
N/A
8 Mercantile Hajj card will be launched soon.
Bank Ltd. A special type of prepaid card for students is going to launch soon.
9 National Bank
N/A
10 Premier Bank • Chip based card• EMV card
11 Jamuna Bank Ltd.
Pre-paid card Gift cardHajj CardTravel card
12 BRACBank N/A13 t ni a Variable Interest Rate
EMI Plan
Balance Transfer
Round the clock cash withdrawal facility at any Visa branded ATM throughout the world
Round the clock purchasing power for goods and services at any Visa branded POS outlet
24% interest on Cash Advance
No cash Advance fee at CITY ATMs
Lowest Annual/Renewal Fee
International Roaming facility
Internet Transaction*
Convenient Repayment option
E-statement
Limited Lost Card Liability
Secured with your Photo – Photo Card
24 hours customer service help deskAccording to the changing need of customer City Bank is launching MS card which will provide all types of facilities to its customers. Eligible customer’s monthly income must be at least 70,000 taka.
14 IFIC Bank User flexibilityMore attractive interestConvenience balance transfer facilitiesRound the clock purchasing power for goods and services
Internet TransactionLimited Lost Card LiabilityEnsuring more safety by using finger print
15 Dhaka Bank Reward point (usage discount)Discount or renewal feeJoining fee 0% interest [15-45 days interest free time period if purchased by credit card ]
16 Dutch Bangla Bank Ltd.
smartly purchase any product
From the above figure it is evident that , all banks are interested to facilitate purchasing power of the customers, they are interested to provide special facility for hajjis whilst a great no. of banks are not interested to add any new special facility in their credit cards.
14. Usage discount:
No. Banks Discounts1 Bank Asia Ltd Usage discount varies around 3%- 20% of usage
amount.Discounts for customers in purchase or buying in corporate partners
2 Commercial Bank of Ceylon It will be determined on the basis of the company strategy and performance.
3 Exim Bank Ltd. Still they have no usage discount4 NCC Bank Ltd N/A5 Janata Bank Ltd. So far no such usage discount has been provided6 South East Bank Ltd. No such discount given7 Eastern Bank Ltd. Heavy discount on their products and services8 Mercantile Bank Ltd. On the basis of the payment condition up to 100%
interest is discounted to the valuable customers9 National Bank N/A10 Premier Bank N/A11 Jamuna Bank Ltd. Not available12 BRACBank N/A13 City Bank N/A14 IFIC Bank If the employees of IFIC Bank use these cards,
they do not have to pay any charge for first year. In second year they will get 50% discount from their yearly charge.IFIC Bank comes to a contract with Reliance Insurance ltd that the employees of Reliance insurance are not required to pay annual charge for first year if they use credit card of IFIC Bank ltd and also they will get 50% waiver of their annual charge in 2nd year.The user of credit card will get 15% discount in peak season and 40% discount in off peak season if they stay PRASAD PARADISE in Cox’s Bazar.
15 Dhaka Bank No discount yet16 Dutch Bangla Bank Ltd. Still they have no usage discount
From our list, six banks are not providing any usage discount to the customers, five banks don’t provide any answer for this question because they are reluctant about the facility. Only IFIC and Mercantile banks are different because IFIC is providing a lot of usage discount and Mercantile bank is providing 100% interest rate discount to the valuable customers on some conditions.
This situation can be figured in the following figure:
15. Prospect
No. Banks Prospects
1 Bank Asia Ltd The Bank has got good prospects. In 2009, it is in the
2nd position behind only Standard Chartered Bank.All the branches perform credit card operation; mainly more response from divisional districts.
2 Commercial Bank of Ceylon
As their numbers of customers are increasing, they are expecting that, this credit card division will be successful.
3 Exim Bank Ltd. With VAT, purchasing power, GDP growth, company revenue as well as domestic production is increasing.
4 NCC Bank Ltd As the revenue of the bank from the credit card division is increasing gradually and it contributes a huge amount to the total profitability of the organization, so the prospect of this division is well enough.
5 Janata Bank Ltd. Prospect of this department is not well enough.6 South East Bank Ltd. Single Card – Dual Use (Local and International)
Widely accepted at Merchants and ATMs worldwideCompetitive annual/renewal fee50 days interest free credit facility50% card drawing facility at ATMS and any SE bank branchSMS Push-Pull service24 hours customer service etc
7 Eastern Bank Ltd. N/A8 Mercantile Bank Ltd. It’s Prospect is bright9 National Bank N/A10 Premier Bank Very good11 Jamuna Bank Ltd. Very effective in future12 BRACBank N/A13 City Bank Future prospect of the bank credit card is very
attractive. In response to the customer’s increasing demand, the bank is going to launch MS CARD where only sophisticated and high income class people are eligible for it. The growth of their number of customer is also satisfactory.
14 IFIC Bank The bank has launched its VISA card in 2007 and since then it has experienced a tremendous growth in number of customers and in revenue.
15 Dhaka Bank To capture higher market share by offering special featured of credit card
16 Dutch Bangla Bank Ltd. With VAT, purchasing power, GDP growth, company revenue as well as domestic production is increasing.
As people of Bangladesh are becoming digital in all sectors, they are using more and more credit card facilities now-a-days. The world of banking has introduced a new world with different facilities in Bangladesh which makes Bangladesh digital means modern. From our listing banks’ scenario we can say that with Bangladesh peoples upgrading life banks’
profitability as well as credit card usage is also increasing with the concerned division success.
16. Constraint
No. Banks Constraints1 Bank Asia Ltd There is an age limit for customers (21-61 years). Bank doesn’t
issue credit cards to applicants outside this limit.If applicant’s net income is low, then bank doesn’t provide credit card.Some business persons change their address and never lets bank know. In business person’s aspect, bank gives more priority to reference to track them. Bank tries to avoid customers having risky profiles.Some professionals are avoided (police, lawyers etc)
2 Commercial Bank of Ceylon
Over loan tendency of the peopleTendency of making delay in payment.Lack of consciousness about using the card.
3 Exim Bank Ltd. Govt. imposes vat on the card. People are not aware of this type of transaction.High designation must be needed to get credit card etc.
4 NCC Bank Ltd None5 Janata Bank Ltd. No central database system. For efficient and effective operation
strong technical support is must. No core banking software.No separate Credit Card Department. It is operated under the Business Development Marketing Department.Lack of manpower in operation, marketing and recovery section.Communication and media problem.Have to maintain credit card operation centrally.
6 South East Bank Ltd.
The bank does not have any ATM machines, which is their greatest weakness. They only act as issuers, not acquirers. Lot of players already exists in the market but even then the bank is following conservatism strategy.
7 Eastern Bank Ltd.
N/A
8 Marcantile Bank Ltd.
Penetrating markets is difficult.Good repayment behavior is rare.
CIP, VIP are already existed cards.Most of the people have very low electronic knowledge
9 National Bank Nil10 Premier Bank Technology is not still developed across the country11 Jamuna Bank
Ltd. Nil
12 BRACBank Nil13 City Bank Although the bank has a good number of customers, Bank has
found difficulty in schooling their customer how to use these cards.POS machine are not adequateImposition of additional 15% vat discourages customers.As it is very risky product and no collateral is required, Bank needs to be very cautious in customer appraisal procedure.
14 IFIC Bank Limited number of ATM booths POS machine are not adequatePeople are not familiar with the use of this technologyImposition of additional 15% vat discourages customers.As it is very risky product and no collateral is required, Bank needs to be very cautious in customer appraisal procedure
15 Dhaka Bank No Push-Pull service (SMS)Chaque book, Credit Card etc. are not provided yet.Conservative approach in assigning limit
16 Dutch Bangla Bank Ltd.
Govt. imposes vat on the card. People are not aware of this type of transaction.High designation must be needed to get credit card etc.
As people of Bangladesh are becoming digital in all sectors, they are using more and more credit card facilities now-a-days. But because of various constraints people as well as banks are facing problems to use this more. We can make a clear picture in our mind about these problems from the above figure.
17. Marketing Strategy
No. Banks Marketing Strategy
1 Bank Asia LtdThe bank has a conservative marketing strategy. It doesn’t provide cards whoever comes. It provides cards only after ensuring full security.
Advertisements are only done in newspapers. But more emphasis is put on personal selling i.e. providing cards to people bank’s employees know. Generally, bank follows the KYC (know your customer) approach.
2 Commercial
Bank of Ceylon
No aggressive approach.Advertisement will be published in the newspaper soon.Corporate level program about the card will be started soon (with their all corporate client).
3 Exim Bank Ltd. On line advertisement, office to office direct marketing, Encourage the high designation people by giving Email as well as business man.Traditional festival based discount on usage
4 NCC Bank LtdDoor to Door Approach
5 Janata Bank Ltd.When the bank starts its full operation (planned 2010), it will provide credit card services through branches.Branches will be given set targets of no. credit card issuance periodically.Bank plans to set up POS in different areas.
6 South East Bank
Ltd.
SE bank’s marketing strategy and focus is limited to specific group of target customers. They are very strict and rigorous in issuing credit cards.
80% of their total card base are bankers, 10% are businessmen issued through other branches, 8% are other organizations and 2% are other miscellaneous businessmen.
7 Eastern Bank
Ltd.
None
8 Marcantile Bank
Ltd.
No push sell.Not too liberalTough assessmentLow interestOccasional discount.
9 National Bank None
1
0
Premier BankNot available enough marketing strategy including lower advertising and only selling the card through direct sales executive.
1
1
Jamuna Bank
Ltd.
Convincing the existing customers of JBL by branch employees.
1
2
BRACBank None
1
3
City Bank
1
4
IFIC BankIncreasing number of profitable customers rather only increasing the number of customersTargeting to attain almost 15% growth in every year in revenue from credit cardIncreasing number of ATM booths for ease of customerMaintaining adequate POS machineProviding training to its sales staff.
1
5
Dhaka BankEncourage people to possess credit card by making them understand about the advantage and facilities of using credit card.
16 Dutch Bangla
Bank Ltd.
On line advertisement, office to office direct marketingEncourages the high designation people by giving Email as well as business man. Traditional festival based discount on usage.
It is not important to discuss anything here because of the figure’s clearness.
NOTE: Here, to make charts we have used only most popular and larger number of points in figuring all figures because at time of adding all points figures become clumsier. So to make charts we use conservative and “clear to see” approach.
CONCLUSION
Paper money and coin are risky and burdensome for carrying. A credit card is a great
financial tool. It can be more convenient to use and carry than cash, and they offer valuable
consumer protections
There are many business centers which do not give card facilities causing troubles to the
cardholders. The most disadvantage of the card is that all the people wishing to be
cardholders cannot enjoy card facilities because of ceiling-touch income bracket along with
other criteria, only a certain section of people fulfilling criteria can be cardholders.
A versatile, reliable credit card processing service can help business increase sales by
enabling you to accept all forms of payment from anywhere at anytime.
Credit card debt has increased steadily. As the card debt is increasing day by day so the
default risk is also increasing. To minimize this risk people have to self-restrict to make
expenditure. They should not take debt to such that amount which will be like burden to
them. Appropriate rules and regulation is also needed to minimize this default risk.