Special discounts for pet lovers will drive credit card transactions, ICBC hopes

As ICBC Asia launches special offers on pet travel packages for holders of its “pet credit card”, analysts said banks in Hong Kong were going to increasing extremes to secure new card holders.

In a launch ceremony on Tuesday, ICBC Asia announced that it would roll out a special e-commerce platform, “My Life”, which would include a “pet section” offering a series of privileges on various pet products and services for holders of the bank’s ICBC Visa Signature Card – referred to less formally as its “pet credit card”.

The offers, which include discounts on pet food, tools and cleaning products as well as on pet travel packages and free pet travel consultations, would help drive credit card transactions, said Agnes Tse, deputy head of the bank’s credit card centre.

“We are targeting pet owners as they often have higher incomes and educational backgrounds,” she said.

James Lloyd, EY’s fintech leader for Asia Pacific, said: “Banks are going to increasing extremes to secure new credit card holders.” He described Hong Kong as an “already heavily card-penetrated market.”

ICBC Asia declined to say how many users they were targeting with the new cards, but they currently have 300,000 credit cards in use in Hong Kong.

As of the end of 2016, there was a total of 19.2 million credit cards in circulation in Hong Kong according to figures from the Hong Kong Monetary Authority.

Hong Kong’s population is 7.3 million people.

The competition for card holders is putting banks’ operating models under pressure.

The more points and offers banks need to offer to attract users, the more squeezed their margins become, and this may underpin the move towards more niche or gimmicky ways of attracting credit card users.

For example, one Hong Kong resident, Lo Ming-kit, said he had applied for a Bank of China Hong Kong credit card as it offered a free shuttle service to the airport.

Nonetheless Lloyd said that there was still logic behind banks’ efforts to attract users.

“There’s still money to be made on fees, foreign exchange, and cash advances, and card offers can be an effective means of client acquisition,” he said.

ICBC Asia is not the only bank to adopt an unusual approach to attracting users to its plastic.

In May, Standard Chartered Bank launched four new ATM cards featuring logos from Iron Man and other Marvel characters, and said it was hoping to issue 100 000 such cards in the first 12 months.

As the credit card issuers compete for market share, they are also facing a looming threat from digital payment providers.

Both Alibaba’s Alipay service and Tencent’s WeChat wallet are hoping to make headway in Hong Kong.

“While I don’t think Alipay and WeChat are going to do away with cards anytime soon, they, along with the faster payments service currently being developed in Hong Kong will contribute to overall pressure on the economics of the traditional four-party credit card model,” said Lloyd.

The total value of credit card transactions in Hong Kong was HK$167.2 billion for the last three months of 2016, according to the Hong Kong Monetary Authority.