Banking services in Hong Kong

Credit card – past, present and future

Outline

1.Introduction of Credit Card

2.History of Credit Card

3.Master Card vs. Visa Card

4.Types of Credit Card

5.Service/ Discount of Credit Card

6.Comparison of the service fee of different banks

7.Future Trend of Credit Card

History of Credit Card

Concept of using a card for purchase-Edward Bellamy( 貝拉密 ) and described in his utopian( 烏托邦 ) novel Looking Backward( 《回顧》 )

-published in 1887

Concept of paying merchantsusing a card-Ralph Schneider and Frank X. McNamara-Diner Club

Popularize of Credit Card-First Credit Card: 1920’s, in United States-1938: more and more companies accept using credit card

Great Changes of Credit Card-Bank of America -->BankAmericard

-MasterCard-->MasterCharge

-Barclaycard in the UK launched the first credit card outside of the US

Design of Credit Card-become more and more important

MasterCard vs. Visa Card

“ tangible item/service: price, tangible item/service: price, tangible item/service: price, intangible item/concept: priceless. There are some things money can't buy. For everything else, there's MasterCard. ”

MasterCard Worldwide • owned by the over 25,000 financial institutions

• created by

~ Wells Fargo

~ Crocker National Bank

~ The Bank of California

in 1967

Card Issuing Bank - cardholder’s financial institution

- licensed member of MasterCard.

Cardholder- solicited, screened, and approved by the issuer

- issues the bankcard.

Merchant- wants to accept cards for payment

- meet the qualification standards Acquirer - licensed member of MasterCard

MasterCard- provide services to consumers and merchants.

How MasterCard Works?

Merchant Acquirer MasterCardNetwork

Issuer Cardholder

Transaction beings

The Cardholder purchases services or goods from merchant

Authentication

The merchant, in effect, sells the transaction to the “acquirer” and is reimbursed the amount of the sales ticket less a “discount fee”

Transaction submitted

The acquirer submits the transaction to the issuing bank for paymentvia the MasterCard interchange and settlement system.

Merchant payment

The issuing bank pays the merchart acquirer, less and interchange fee which partially reimburses the issuer for its expense, through theMasterCard settlement system

Cardholder payment

Finally, the cardholder repays the issuer for the goods or services originally purchased from the merchant

What is VISA?

• The Visa International Service Association

• economic joint venture

• 21,000 financial institutions

Corporate structure • Debit Card

• Credit card

• Prepaid card

VISA links buyers and sellers

Business highlights:VISA worldwide statistical data:

+

Business highlights:VISA worldwide statistical data:

Visa’s share of personal consumption expenditure:

Hot topic:

• Account Compromise in USA

• the breach of data security at US-based processor Card Systems Solutions Inc (CSI)

• 40 million cards across all payment brands • 205,000 were Visa cards

What can prevent this from happening again?

• Account Information Security (AIS)

• Risk Management program sponsored by

Visa and run by Visa's members

What can prevent this from happening again?

•Verified by Visa

Types of credit card

Types of Cards--3 main types in Hong Kong

According to the card organization: Mastercard, American Express card

According to credit rank: the classic card (Sometimes the ordinary card is called silver card), the gold card, the platinum card, the premier card

According to cardholder's status: individual card, official business card, company card

Ways to Attract CustomersHSBC and Hang Seng Bank: discount in different shops

Citibank: Free Gifts

Da Sang Bank and Bank of China: Attractive appearance

Why credit card become so popular in Hong Kong?

-For Merchants: can receive money from the bank immediately

-For Cardholder: can get the product at once and pay it a month later can pay it by installment just bring a card and go out

-For Bank: earn commission earn interest

-More and more banks exempt the annual fee

Service / Discount of Credit Card

• New Looks

• Welcome Offers

• Credit Card Offers and Rewards

The comparison of different items of credit

card from banks

The comparison of different items of credit card from banks• Bank of China (Hong Kong) ( 中國銀行 ) • DBS Bank (Hong Kong) Limited ( 星展銀行 )• Hang Seng Bank Limited ( 恆生銀行 ) • The Hong Kong and Shanghai Banking Corporati

on Limited (HSBC) ( 匯豐銀行 )• Wing Lung Bank Limited ( 永隆銀行 ) • Chong Hing Bank Limited ( 創興銀行 ) • Standard Chartered Bank (Hong Kong) Limited

( 渣打銀行 )

The comparison of different items of credit card from banks• the accessibility of finding information

• annual fee

• over credit limit charge

• lost card replacement fee

• late fee

• the interest rate of cash advance ( 現金透支 )

• request copy of card statement fee

The accessibility of finding information

The accessibility of finding information

• The promotion leaflet only state the advantages of applying the card

• Need to get the details

• Easiest: Hang Seng

• The most difficult: DBS

Annual fee

Annual feeHSBC Hang

Seng Bank

Bank of

China

Standard Chartered

Bank

DBS Bank

Chong Hing B

ank

Wing Lung Bank

HK

$220

HK

$240

HK

$220

HK$250 HK

$250

HK

$220

HK

$220

HK

$110

HK

$120

HK

$110

HK$125 HK

$125

HK

$110

HK

$110

Over credit limit charge

Over credit limit charge

HSBC Hang Seng B

ank

Bank of

China

Standard Chartered

Bank

DBS Bank

Chong Hing B

ank

Wing Lung Bank

HK

$130

HK

$130

HK

$100

HK$130 HK

$100

HK

$120

HK

$150

Lost card replacement fee

Lost card replacement fee

HSBC Hang Seng B

ank

Bank of

China

Standard Chartered Bank

DBS Bank

Chong Hing B

ank

Wing Lung Bank

HK

$100

HK

$100

HK

$100

HK$30 HK

$100

HK

$50

HK

$100

Late fee

Late fee

HSBC Hang Seng B

ank

Bank of

China

Standard Chartered

Bank

DBS Bank

Chong Hing B

ank

Wing Lung Bank

5%(HK$130

-HK$200)

5%(HK$130

-HK$200)

5%(HK$130

-HK$200)

5%(HK$130

-HK$200)

HK

$150

5%(HK$100

-HK$200)

5%(HK$130

-HK$200)

The interest rate of cash advance

The interest rate of cash advance

HSBC Hang Seng Bank

Bank of China

Standard Chartered Bank

DBS Bank

Chong Hing B

ank

Wing Lung Bank

28.52% 24% 30%

(min. $5)

34.2% 30% Visa: 36.79%

MasterCard:

35.89%

36.47%

Request copy of card statement fee

Request copy of card statement fee

HSBC Hang Seng Bank

Bank of

China

Standard Chartered Bank

DBS Bank

Chong Hing B

ank

Wing Lung Bank

HK$30

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Latest 3 months:

fee of charge

HK$50

@cycle

HK$50

@page

HK$30

@page

HK$50

@cycle

HK$50

@cycle

HK$50

@page

Future:-

The future trends of credit card

The future trends of credit card

• counterfeit banknotes

• cashless society

• the weakness of the credit card

• embedded an integrated circuit

ENDQ and A SECTION