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Introduction:

Prime Bank limited is a fast growing private sector bank and the bank has focused for

providing high quality customer service at a very competitive price. PBL efforts are

directed at diversification of products and services. Offering customers a wide varietyof choices and options have remained cornerstone of their business strategy.

In this backdrop, PBL has launched credit card business in collaboration with a global

player like Mastercard. Mastercard is one of the top 20 brands in the world. An

alliance with these as its principal member is definitely a big advantage from

marketing point of view. The policy planners have found a showing growth of card

market with the increasing acceptability of plastic money in many outlets; the business

has become intensely competitive. More players had entered into the market and some

others were preparing for entry into the same. As increasing number of customers

were turning to the convenient features of credit card usage, PBL had steeped up

marketing efforts to retain and enhance their market.This report is basically deals with A Competitive Analysis of Prime Bank Credit

Card with the Credit Cards offered by Standard Chartered Bank and National Bank

Limited and its contribution towards the company growth.

Overview of the problem:

This paper emphasize that all tasks assigned to a marketing research manager, none is

more critical that analysis competitors activities, performance and potentially in credit

card market in Banking area that effect the projection in the future periods arefundamentals to architectonic a long term strategic plan and designing appropriate

marketing strategies.

In a research project is has been identified that the sales growth become negative for

the last few months. Through this research proposal I like to identify the factors,

which affect large in consumer preference at the time of selecting a particular

companies credit card and find out prospective solution to overcome those

shortcomings. At the same time in this exercise, it is tried my best to identify the

variables that are significantly collateral in competitive advantage and by

distinguished cardholders and merchant effect in performance.

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Objective of the study:

The main objective of the study is it explore and examine the underlying issues critical

to developing and maintaining long term exchange relationship with the customers of

the PBL. More specifically through this study I like to find out the lacking of PBL interms of its competitive competitors.

1. To identify the competitors of the PBL.

2. Identify the customer (cardholders) preference that differentiates the services

of PBL Card with the competitor in the market.

3. Identify the merchant preference in credit card transaction.

4. Identify the share of heart of cardholders in charging credit card.

5. To identify the share of dollars in credit and changing in total expenses.

6. Identify the different changes, interest and service fees that give the competitive

advantage in credit card market.7. The preference of merchant in credit card transaction.

8. Potentiality of credit card.

9. Find the variables that act as competitive advantage in credit card market.

Research Questions:

To achieve the objectives the following major research questions areidentified:

1. What are the factors affect customers at the time of evaluation of the offerings

of credit card of different competitors?

2. Who are the competitors of PBL Credit Card and their performance

comparing with Prime Bank Credit Card?

3. What type of benefits do consumers expect from credit card and what type of

difficulties they face at the time of using it?

4. What type of differentiations exists in the competitive of credit card according

to its interest, service charge and fees?

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Methodology:

Once the research objectives are finalized the next logical step to achieve the objectives

is to decide the methodology to be followed.In order to achieve the primary objective,

quantitative method, in particular case study approach, appear more appropriate incollecting necessary data. Survey method can be use for research purpose through

using a structured questionnaire that will be prepared both for cardholders and

merchants.

Data Collection: Both the primary and secondary form of information and alsorequires a depth observation of the phenomenon to be investigated is used to achieve a

report which is more meaningful and presentable. But most of the data are primary.

The details of these sources are given below:

Primary Sources:

Major source of collecting information is questionnaire, which will beprepared both for cardholders as well as for merchant.

Another source of information may be discussions with the officers of credit

card division through in depth interview of the competitive companies.

Practical work exposure in the credit card division may consider another

source of information.

Secondary Sources:

Brochures of different banks, their annual report, research publications,

annual report of BIBM on Bank Management can be the secondary sources

for collecting information. Dhaka Commercial bank Management.

Dhaka Security and Exchange Commission who store information of all the

banks operating in our country.

Layout: All necessary parts of conventional formal report have been followed. The

readers are expected to get a different taste from this report.

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Time and Budget Schedule:

For the proposed research we need to set a time set and required budget schedule,

which may help to determine for further research step:

Time Schedule

Tasks Time

1. Preparing a Research Proposal

2. Completion of Literature review

3. Developing interview guideline and Negotiation with the

cardholders and merchant

4. Data collection5. Data transcription

6. Data Analysis

7. Completions report writing, preparing recommendation

and submission.

1 Weeks

1 Week

2 Weeks

2 Weeks2 Weeks

2 Weeks

2 Weeks

Total 12 Weeks

Project BudgetSubjects Costs

1. Collection of literature

2. Salary of the field investigators

3. Tape Recorder, Telephone Charge and stationary

4. Data Collection

5. Data Transcription

6. Printing and other costs

Tk. 2,000.00

Tk. 10.000.00

Tk. 1,000.00

Tk. 2,000.00

Tk. 2,000.00

Tk. 3,000.00

Total Tk. 20,000.00

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CHAPTER-1

THEORITICAL BACKGROUND

Every firm competing in an industry has a competitive strategy, whether explicit or

implicit. This strategy may have been developed explicitly through appalling process

or it may have evolved implicitly through the activities of the various functional

departments of the firm. Left to its own devices, each functional department will

inevitably pursue approaches dictated by its professional orientation and the

incentives of those in charge. However, the sum of these departmental approaches

really equals the best strategy.

Competition

Competition includes al the actual and potential rival offerings and substitutes that a

buyer might consider.We can broaden the picture further by distinguishing four levels of competition, based

on degree of product substitutability:

1. Industry competition: A company sees its competitors as all companies makingthe same product or class of products. Volkswagen would see itself as competing

against all other automobile manufacturers.

2. Form competition: A company sees its competitors as all companiesmanufacturing products that supply the same service. Volkswagen would see itself

competing against not only other automobile manufacturers but also againstmanufacturers of motorcycles, bicycles, and trucks.

3. Generic competition: A company sees its competitors as all companies thatcompete for the same consumer dollars. Volkswagen would see itself competing with

companies that sell major consumer durables, foreign vacations, and new homes.

Essentially developing a competitive strategy is developing a broad formula for how a

business is going to compete, what its goals should be, and what policies will be needed

to carry out those goals.

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Process for Formulating a Competitive Strategy

A. What is the Business Doing Now?

1. Identification

What is the implicit or explicit current strategy?

2. Implied AssumptionsWhat assumptions about the companies' relative position, strengths and

weaknesses, competitors and industry trends must be made for the current strategy to

make sense?

B. What is happening in the Environment?

1. Industry AnalysisThe key factors for competitive success and the important industry opportunities and

threats?

2.Competitors Analysis

What are the capabilities and limitations of existing and potential competitors, and

their probable future moves?1. Societal Analysis

What important governmental, social, and political factors will present

opportunities or threats?

2. Strengths and Weaknesses

Given an-analysis of industry and competitors what are the company strengths and

weaknesses relative to present and future competitors?

C. What should the business be doing?

1. Tests of Assumptions -an strategy

How do- the assumptions embodied in the current strategy compare with the analysis

in B above?2. Strategy Alternatives

What are the feasible strategy alternatives given the analysis above? Is the current

strategy one of these?

3. Strategy Choice

Which alternative best relates the company's situation to external opportunities and

threats?

STRUCTURAL ANALYSIS AND COMPETITIVE STRATEGY:

An effective competitive strategy takes offensive or defensive action in order to createa defendable position against the five competitive forces. Broadly, this involves a

number of possible approaches.

Positioning the firm so that its capabilities provide the best defense against

the existing array of competitive forces.

Influencing the balance offered through strategic, thereby improving the

firm's relative position; or

Anticipating shifts in the factors underlying the forces and responding to

them, thereby exploiting change by choosing a strategy appropriate to the new

competitive balance before rivals recognize it

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The Structural Analysis of Industry:

The intensity of competition in an industry is neither a matter of confidence nor bad

luck. Rather, competition in an industry is rooted in its underlying economic structure

and goes beyond the behavior of current competitors. The state of competition in an

industry depends on five basic competitive forces, which are show in Figure:

Fig: Driving Forces Industry Competition

Generic Competitive Strategies:

Three Generic Strategies:In coping with five competitive forces, there are there potentially successful generic

strategic approaches to outperforming other firms in an industry.

1. Overall cost leadership

2. Differentiation3. Focus

OVERALL COST LEADERSHIP

The first strategy an increasingly common one in the 1970s because of popularization

of the experience curve concept, is to achieve overall cost leadership in an industry

through a set of functional policies aimed at this basic objective. Cost leadership

requires aggressive construction of efficient -scale facilities, vigorous pursuit of cost

reductions from experience, tight cost and overhead control, avoidance of marginal

customer accounts, and cost minimization in areas like R&D, service, sales force,

advertising, and so on.

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POTENTIAL

ENTRANTS

(Threats of new

entrants)

SUPPLIERS(Bargaining

power of

suppliers)

BUYERS(Bargaining

power of

buyers)

INDUSTRY

COMPETITOR

Rivalry among

existing firms

SUBSTITUTES

(Threats of

substitute products

ofservices)


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DIFFERENTIATION

The second generic strategy is one of differentiating the product or service offering of

the firm. Creating something that is perceived industry wide as being unique.

Approaches to differentiating can take many forms: design or brand image (Fieldcrest

in top of the line towels and linens: Mercedes in automobiles) technology) Hysteria in

lift trucks Macintosh in stereo companions Coleman in camping equipment) features

(Jennie air in electric ranges); customer service Crown cork and seal in metal cans)

dealer network (Caterpillar Tractor in construction equipment,) or other dimensions.

Product Services Personnel Channel Image

Form

Feature

Performance

Conformance

Durability

ReliabilityRepair Ability

Style

Design

Ordering Ease

De4livery

Installation

Customer Training

Customer

ConsultingMaintenance &

Repair

Miscellaneous

Competence

Courtesy

Credibility

Reliability

Responsiveness

Communication

Coverage

Expertise

Performance

Symbols

Media

Atmosphere

Events

Table: Differentiation variables

FOCUSThe final generic strategy is focusing on a particular buyer group, segment of product

line, or geographic market; as with differentiation focus may take many forms,

Although the cost and differentiation strategies are aimed at achieving their objectives

industry wide, the entire focus strategy is built around serving a particular target verywell and each functional policy is developed with this in mind.

Strategic Advantage

Uniqueness Perceived

By the Customer Low Cost Position

Industry Wide

Strategic Target

ParticularSegment only

Fig: Three Strategic Strategies

DIFFERENCIATIO

N

OVERALL COST

LEADERSHIP

FOCUS

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A FRAMEWORK OF COMPETITOR ANALYSIS:

Competitive strategy involves positioning abusiveness to maximize the value of the

capabilities that distinguish it from its competitors. It follows that accentual aspect of

strategy formulation is perceptive competitor analysis. The objective of competitor

analysis is to develop a profile of the n attune and success of the likely strategy changeseach competitor might make, each competitors probable response to the range of

feasible strategic moves other firms could initiate, and each competitors probable

reaction to the array of industry changes and broader environmental shafts that might

occur.

Fig: Components of a Competitor Analysis

Areas Competitor Strengths and Weakness

Products

Standing of products, from the user's point of view, in each market segment

Breadth and depth of the production

Dealer/Distribution

Channel coverage and quality

Strength of channel relationships

Ability to service the channel

Marketing and Selling

Skills in each aspect of the marketing mix

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Competitors Response Profile Is the competitor satisfied with itscurrent position?

What likely moves or strategy shifts will

competitors make?

Where is competitor vulnerable?

What will provoke the greatest and

most effective realization by the competitor?

What drive the competitor?

Future GoalAt all levels of management

and in multiple decisions.

What the competitor is doing

and can do?

Current strategyHow the business iscurrently competing?

Assumption

Held about itself and the

industry?

Capabilities

Both Strengths and

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Skills in market research and new product development

Training and skills if the sales force

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Operations

Manufacturing cost position-economies of scale, learning curve of

equipment etc.

Technological sophistication of facilities and equipment

Flexibility of facilities and equipment

Proprietary know-how and unique patent or cost advantages Skills in capacity addition, quality control, tooling, etc.

Location, including labor and transportation cost

Labor force climate, unionization situation.

Access to and cost of raw materials

Degree of vertical integration

Research and Engineering

Patents and copyrights

In house capability in the research and development process (product

research, process, research, development, imitation, etc) R&D staff skills in terms of creatively, simplicity, quality reliability etc.

Access to loused sources of research and engineering.

Overall Costs

Overall relative costs

Shared costs or activities with other business units

Where the competitors is generating the scale or other factors that are key to

its cost position.

Financial strength Cash flow

Short and long term borrowing capacity (relative debt equity aeration)

New equity capacity over the foreseeable future

Financial management ability, including negotiation raising capital, credit in

venturous and accounts receivable

Organization

Unity of values and clarity of purpose in the organization

Organizational fatigue based on recent requirements placed on it

Consistency of organizational arrangements with strategy

General Managerial Ability

Leadership qualities of CEO; ability of CEO to motivate

Ability to coordinate particular functions or groups of functions (e g

manufacturing with resource coordination)

Age training and functional orientation of management Depth of

management

Flexibility and adaptability of management

Corporate portfolio

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Ability of corporation to support planned changes in all business units in terms

of financial and other resources

Ability of corporation to supplement or reinforce business unit strengths

Others

Special treatment by or access to government bodies

Personnel turnover

Value chain:

To diagnose competitive advantage it is necessary to define a firm's value chain for

competition in a particular industry. Starting with the generic chain, individual value

activities are identified in the particular firm. Each generic category can be divided

into discrete activities, as illustrate for one generic category in the following figure

Fig: The generic Value chain.

STRUCTURAL ANALYSIS WITHIN INDUSTRIES

Dimensions of Competitive StrategyCompanies' strategies for competing in an industry can differ in as wide variety of

ways. However the following strategic dimension usually capture the possible

differences among a company s strategic options in a given industry:

Specialization: the degree to which to which it focuses its efforts in terms of the

width of its line the target customer segments an the geographic markets served;

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Firm Infrastructure

Human Resource Management

TechnologyDevelopment

Procurement

Inbound

Logistics

Operations Outbound

Logistics

Marketing

&

Sales

Service

Marketing

Management

Advertising Sales Force

Administration

Technical

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Promotion


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Brand identification: the degree to which it seeks brand identification rather

than competitors based mainly price or other variables. Brand identification can be

as sieved inverting sales force or variety of other means.

Push versus pull: the degree to which it seeks to develop brand identification

with the ultimate consumer directly versus the support of distribution channels inselling its product.

Channel selection: the choice of distribution channel ranging from company

owned channels to specialty outlets to broad line outlets.

Product quality: its level of product quality in terms of raw materials

specifications, adherence to tolerances, features, and so on;

Technological leadership: the degree to which it seeks important to note that a

firm could be a technological leader but deliberately not produce the highest quality

product in the market quality and technological leadership do not necessarily go

together;

Vertical integration: the extent of value added as reflected in th level of

forward and backward interruption adopted in clouding whether th firm has captive

distribution exclusive or owned retail outlets an in house service network and so on;

Cost position: the extent to which it seeks the low cost position in

manufacturing and distribution through investment in cost minimizing facilities and

equipment;

Service: the degree to which it provides ancillary services with its predict line

such as engineering assistance and in house service network credit and so forth. This

aspect of strategy could be viewed as part of vertical integration but of vertical

integration be is usefully separated for analytical purposes;

Price policy: its relative price position in the market. Price position will usually

be related to the relationship between a unit and its parent such other variables as

cost position and product quality but price is a distinct strategic variable that must

be treated separately;

Leverage: the amount of financial leverage and operating leverage it bears;

Relationship with parent company: requirements on the behavior of the unit

based on the relationship between a unit and its parent company. The firm could be a

highly diversified conglomerate, one of a vertical chain of businesses part of a cluster

of related businesses in general sector a subsidiary o foreign company an dos no. The

gnarr of the relationship with the parent will influence the objectives with which the

firm is managed the resources available to it and perhaps determine some operations

or functions that it shares with other units;

Relationship to home an host government: in international industries therelationship the firm has developed or is subject to with its home government as well

as host governments in foreign countries where it is operating.

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Competitive Advantage

Marketing MixMarketers use numerous tools to elicit desired responses from their target markets.

These tools constitute a marketing mix. Marketing Mix is the set of marketing tools

that the firm uses to pursue its marketing objectives in the target market.

McCarthy classified these tools into four broad groups that he called the four Ps of

marketing: product, price, place, and promotion.

Robert Lauterborn suggested that the sellers four Ps correspond to the customers four

Cs.

Four Ps Four Cs

Product Customer solution

Price Customer cost

Place Convenience for customer

Promotion Communication with customer

Winning companies will be those who can meet customer needs economically and

conveniently and with effective communication will get advantage against competitor.

Marketer Responses and AdjustmentsMarketers also are rethinking their philosophies, concepts, and tools. Here are the

major marketing themes as the millennium approaches:

Relationship marketing: from focusing on transactions to building long-term,

profitable customer relationships. Companies focus on their most profitable

customers, products, and channels.

Customer lifetime value: From making a profit on each sale to making profits

by managing customer lifetime value some companies offer to deliver a constantly

needed product on a regular basis at lower price per unit because they will enjoy the

customer's business for a longer period.

Customer share: from a focus on gaining market share to a focus on building

customer share. Companies build customer share by offering a larger variety of

goods to their existing customers. They train their employees in cross selling and up

selling.

Target marketing: from selling to everyone to trying to be the best firm

serving well defined target markets. Target marketing is being facilitated by the

proliferation of special-interest magazines, TV channels, and Internet newsgroups.

Individualization: From selling the same offer in he same way to everyone in

the target market to individualizing and customizing messages and offerings.

Customers will be able to design their own product features on the company's Web

page.

Customer database: from collecting sales data to building a rich datawarehouse of information about individual customers' purchases, preferences,

demographics, and profitability. Companies can "Data mine" their proprietary

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databases to detect different customer need clusters and make differentiated

offerings to each cluster.

Integrated marketing communications: from heavy reliance on one

communication tool such as advertising or sales force to blending several tools to

deliver a consistent brand image to customers at every brand contact.

Channels as Partners: From thinking of intermediaries as customers to

treating them as partners in delivering value to final customers.

Every employee a marketer: From thinking that marketing is done only by

marketing, sales, and customer support personnel to recognizing that every employee

must be customer-focused.

Model-based decision-making: from making decisions on intuition or slim data

to basing decisions on models and facts on how the marketplace works.

These major themes will be examined throughout this book to help marketers and

companies sail safely through the rough but promising waters ahead. Successful

companies will be those who can keep their marketing changing as fast as their market

place and market space.

Tools for Tracing and Measuring Customer Satisfaction:

Complaint and suggestion systems:

A customer-centered organization makes it easy for its customers to deliver

suggestions and complaints. These information flows provide companies with manygood ideas and enable them to act quickly to resolve problems.

Customer satisfaction surveys: Studies show that although customers are

dissatisfied customers will complain. Most customers will buy less or switch

suppliers. Complaint levels are thus not a good measure of customer satisfaction.

Responsive companies measure customer satisfaction directly by conducting periodic

surveys.

Ghost shopping: Companies can hire persons to pose as potential buyers to

report on strong and weak points experienced in buying the company's and

competitors' products. These mystery shoppers can even test whether the company's

sales personnel handle various situations well.

Lost customer analysis: companies should contact customers who have stopped

buying or who have switched to another supplier to learn why this happened. Not

only is it important to conduct exit interviews when customers first stop buying, but

it is also necessary to monitor the customer loss rate. If it is increasing, this clearly

indicates that the company is failing to satisfy customers.

Today, more and more companies are recognizing the importance of satisfying and

retaining current customers. Here are some interesting facts bearing on customerretention:

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Acquiring new customers can cost five times more than the costs involved in

satisfying and retaining current customers. It requires a great deal of effort to

induce satisfied customers to switch away from their current suppliers.

The average company loses 10 percent of its customers each year.

A 5 percent reduction in the customer defection rate can increase profits by 25

percent to 85 percent, depending on the industry. The customer profit rate tends to increase over the life of the retained

customer.

A satisfied customer tells about the company or product to 5/6 people, but on

the other hand a dissatisfied customer tells to 15 to 18 people from hisexperience.

Adding Financial Benefits:Two financial benefits that companies can offer are frequency marketing programs

and club marketing programs. Frequency marketing programs (FMPs) are designed

to provide rewards to customers who buy frequently and / or in substantial amounts.

Frequency marketing is an acknowledgment of the fact that 20 percent of a company'scustomers might account for 80 percent of its business.

Adding social Benefits:Here company personnel work on increasing their social bonds with customers by

individualizing and personalizing customer relationships. Following table contrasts a

socially sensitive approach with a socially insensitive approach to customers.

Good Things Bad things

Initiate positive phone callsMake recommendations

Candor in language

Use phone

Show appreciation

Make service suggestions

Use "we" problem-solving language

Get to problems

Use jargon or shorthand

Personality problems aired

Talk of "our nature together"

Make only callbacksMake justifications

Accommodative language

Use correspondence

Wait for misunderstandings

Wait for service requests

Use "owe-us" legal language

Only respond to problems

Use long-winded communications

Personality problems hidden

Talk about making good on the past

Adding Structural Ties:The company may supply customers with special equipment or computer linkages that

help customers manage their orders, payroll, inventory, and so on.

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CHAPTER -2

ANALYSIS OF GENERIC COMPETITION

Cash Cheque

Different Types of card

Credit Card

CASH

The present day in convertible paper money and other credit instruments, which

serve, as close substitutes for money called near money are only a recent development.The paper money (Cash) was not used circulation before the French Revolution; paper

money (Cash) is a competitor of modern invention plastic money (credit card). People

today are not habituated in plastic money. The main reason is to use Cash in

transactions are easy acceptability, Government circulation, easily accessible, store

value, social preference and reluctant of change new medium (credit card) rather than

cash.

CHEQUE

A cheque is an unconditional written order, advanced by a customer to his bank, to

pay on demand a specified sum of money to or to he order of the person named therein

or the bearer of the instrument. A cheque is defined by Negotiable Instrument Act as a

bill of exchange drawn on a specified banker and not expressed to be payable

otherwise that on demand. Cheques came into use in 1875. Crossed Cheque, Bearer

and Order cheque are the different form of cheque, hi selling of goods; cheque is used

in large transaction like industrial market.

DIFFERENT TYPES OF CARD

Bank Card:

Transactions card giving a bank's customers' ability to pay for goods and services at

retail merchant, and get cash at bank teller window or at ATMs. A bankcard may be a

credit cad, tied to a pre-approved line of credit or a Debit Card, drawing funds from

the holder's checking or saving accounts. A bankcard is also used as identification

when cashing a check.

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Debit Card/Assert Card:

A plastic card used to initiate a debit transaction. In general, these transactions are

used primary to purchase goods and services and to obtain cash, for which the

cardholder's asset account is debit by the issuer.There are two types of Debit cards currently is use in USA: national Debit Cards, such

as -the Visa Debit difference is that the national debit cards were designed specifically

as retail payment cards; bank debit card were issued first as ATM access cards and

later as general purpose transaction cards.

Travel and entertainment (T & E) Cards:

Charge cards used to pay for hotel, airlines and others business related expense.

Diners Club, followed by American Express in 1958, issued the first travel card in

1950. Travel Card differs from bank credit cards in several ways. They typically are

30-day charge accounts, with payment due in full before the next billing cycle, theaccountholder receives copies of the original sales drafts (called Country Club billing)

with the monthly billing statement, and some T & e card plans, usually corporate

cards, gibe the C/H a quarterly summary of charges to the card.

Smart Card:

Bank card containing a computer chip for identification, special purposes processing

and data storage. The computer ship has the ability top perform various

computations, such as validating the C/H's PIN, authorizing retail purchases, verifying

account balances and storing personal records. A smart card's internal memory may

also store pertinent information on a consumer's relationship with a bank, brokers,

insurance company or medical history time the card is used. Also called chip card or

memory card.

ATM card:

An unattended self-service terminal activated by a card and cardholder validation

method (CVM) that providing cash withdrawal. It also may perform other functions

including basic banking functions such as accepting deposits, ordering transfers

among accounts, accepting, loan payments and answering account balance inquiries.

CREDIT CARD:

Physically, credit card is a layered piece of hard plastic with holograms and security

features. It also carries a strip of magnetic tape on the back, which is loaded with

electronic data including the cardholder details. The strip in read electronically by

specialized machines called Point of Sale (POS) Terminals at merchants or Automatic

Teller Machines (ATM) in bank premises or elsewhere.

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It is developed on the technology of microchips and cryptography, which have bred a

new generation of payment system. It is only today that the revolution in information

technology has folly hit the area of retail payments. The Card is rectangular, looking

rather like the familiar phone card. Its distinguishing feature is that it acts as cash,

may be large account being only a small piece of documented plastic. This is why it is

popularly called 'Plastic Money'.

HISTORY OF CREDIT CARD:

Credit was first used in Assyria, Babylon and Egypt 3000 years ago. The bill of

exchange - the forerunner of banknotes - was established in the 14th century. Debts

were settled by one-third cash and two-thirds bill of exchange. Paper money followed

only in the 17th century. Christopher Thornton, who offered furniture that could be

paid off weekly, placed the first advertisement for credit in 1730.

From the 18th century until the early part of the 20th, tallymen sold clothes in return

for small weekly payments. They were called "tallymen" because they kept a record ortally of what people had bought on a wooden stick. One side of the stick was marked

with notches to represent the amount of debt and the other side was a record of

payments. In the 1920s, a shopper's plate - a "buy now, pay later" system - was

introduced in the USA. It could only be used in the shops that issued it.

In 1950, Diners Club and American Express launched their charge cards in the USA,

the first "plastic money". In 1951, Diners Club issued the first credit card to 200

customers who could use it at 27 restaurants in New York. But it was only until the

establishment of standards for the magnetic strip in 1970 that the credit card became

part of the information age.

In the late 1940s, a number of U.S. banks started issuing their customers scrip that

could be used like cash in local shops. The Franklin National Bank (New York)- now

EAB (European American Bank) - formalized the practice by introducing the first

modern credit card in 1951.

California-based Bank of America extended the idea throughout the United States by

introducing the Bank Americard (now Visa) in 1960 and franchising a single bank in

each major city as its local affiliate. These affiliates were responsible for signing

contracts with merchants to accept cards as payment, as well as enrolling cardholders

in their respective areas.

At this time, a group of enterprising U.S. bankers who were not "franchises" of Bank

Americard created their own network by accepting one another's local credit cards.

On August 16, 1966, the group formed the Interbank Card Association(ICA) which

later became MasterCard International.

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Functions:

(i) Single MoneyCredit card can be used in world wide as a Single money in transaction with safety. A

MasterCard can easily be accessible in sub-Sahara or in Siberia.

(ii) Emergency situation:In emergency situation (2am) when there is no money at home credit card can be

charge for transaction or cash withdrawal from ATM booth.

(iii) E-commerce:E-commerce is a new business arena in modern world. Buyer and seller can transact

in online and sell goods in terms of credit card.

(iv) Late Payment in Transaction:if there is no money at hand now, one can charge credit card. But the amount such

transactions have to pay to the bank within a future time context.

(v) Cash advance facilities:Credit card can be used to withdraw ATM booth or cash advance facilities from the

bank within the credit limit.

(vi) Security:It gives more security rather than carrying cash.

(vii) 24 hours transaction:Credit card is accessible in transaction within any time of the day

(viii) Social status:Anybody can pay bill by credit card and it relief him from money counting hassle.

(ix) Traveling:In traveling credit card is the best friend. In some constrains it is not possible to

endorse sufficient amount foreign currency. In such situation credit card is the best

option.

(x) Money is the second God:

It is said that money is the second God. In crisis situation whenever anybody lost hisall things in a new place, credit card can relief his hassle because others cannot use it.

So it cannot be robbed.

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The word credit comes from Latin, meaning, "trust".

The first use of magnetic stripes on cards was in the early 1960's, when the

London. Transit Authority installed a magnetic stripe system.

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Parties related to Credit Card:There are four parties related to credit Card.

1. Card Holder

2. Issuer.

3. Acquirer.

4. Merchant.

Cardholder:The Cardholder is solicited, screened and approved by the issuer, which establishes a

line of credit for the customer and issues the credit card.

The Cardholder uses Credit Card either to purchase goods and services from a

merchant or to obtain a cash advance from a member for which the cardholder

receives a monthly bill from the issuer.

Issuer:The Cardholder's financial institution (usually called the issuing member or issuer) is

a licensed member of Master Card and/or Visa. The Issuer:

Issues the card to the approved cardholder

Receives and pays for transactions from Master Card and/or Visa

Bills and collects from the cardholder

The issuer may also benefit from the services of a third party and/or association in

processing information and payments.

Agent BanksManaging a credit program is expensive and some small financial institutions prefer to

offer credit cards to their customers without taking on the complications andresponsibilities of becoming an issuing member.

These small financial institutions can contract to become an issuing agent of an issuing

member. The issuing agent solicits cardholder applicants for the issuer generally

through take-ones made available at its branches. The issuer, in turn, issues the card

its name, has the cardholder relationship makes all of the Credit Decisions, completely

manages the card program. It the agent banks name appears on the card, then the

agent bank must be in foliate/associate member of Master Card/Visa Int' 1.

The issuer usually keeps most the income from the cardholder account the agent

member may or may receive a small compensation for providing the application.

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While the issuing agents income this from arrangement is small, it does, retain

customers who might take their business else-where if a Credit Card Program were

not available at their local financial institution. When the issuing agents name appears

on the card it tends to preserve the financial institution-Cardholder relationship.

AcquiringThe acquiring member or acquirer solicits, screens, and accepts merchants into itsCredit Card Program.

The acquirer is a member of Master Card and/or Visa, and holds a written agreement

with the merchant to.

Accept the merchant's sales slips

Provide the merchant with credit card authorization terminals, instructions,

and contracted support services

Handle and process the credit

The acquirer usually charges the merchant a merchant discount for handling thetransactions. The acquirer is licensed by Master Card and/or Visa and agrees to follow

the operating rules and regulations of the two associations.

MasterCard and Visa provide various services to the acquirer including authorization

and settlement processing, interchange and resolution of member disputes.

Many financial institutions are both issuers and acquirer. As issuer they maintain the

cardholder relationship. As acquirers they maintain the merchant relationship.

MerchantThe Merchant can be virtually any company, which meets the qualification standardsof MasterCard and/or Visa and an acquirer. Typical merchant business includes retail

stores, restaurant, airlines, mail order companies, and health plans to name a few.

MasterCard and Visa both require that the merchant be financially responsible and of

good repute. The merchant has a written agreement with the acquirer to accept the

Credit Cards as payment and to abide by the terms of the agreement.

Definition of Various Credit Card and Terms:

Gold CardVisa or MasterCard Credit Card with a maximum credit limit of USD 5000/-, and

frequently higher. These cards have a higher annual fee than standard bank credit

card, and are marketed to consumers with above average incomes. Sometimes called

prestige card or premium cards.

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Also, American Gold Card, which differs from bank, issued cards. American Express

issues the card, but the credit line is arranged separately, by a bank acting as an agent

for the card issuer, and varies among banks. American Express travel Related

Services Co. issued the first gold cards in 1966 and has claimed a proprietary right to

the name, a claim the court have not upheld.

Secured Credit CardA Credit card backed by a deposit account is issued to marginally qualified borrowers.

Affinity CardCredit Card promoted under a sponsoring agreement between an organization and a

card-issuing bank. In exchange for making available its membership list, the sponsor

receives some compensation from the issuing bank, usually part of issuer's net interest

income. The issuer may waive annual fees for affinity cardholders, or even offer the

card at a lower rate than ordinary bankcards.

Co-branded CardVisa or MasterCard Credit card jointly sponsored by a bank and a retail merchant,

such as departmental store. Co-branded cards may be issued at less cost than

conventional retail private label cards, and give issuing bank access to new customers.

Cardholders may be given incentives, such as discount on merchandise, rebates, or

discounts off purchases. A co-branded card has a tie-in with a specific merchant

rather than an association or professional group. It also can be used at other

merchant. Contrast with Affinity cards.

Islamic credit cardShariah laws of contract Three fundamental principles

1. Principles of Justice2. Principles of transparency

3. Principles of Maslah

Why Islamic credit card?

An alternative mode of payment for Muslims to make retail purchases.

To broaden the product offering of Islamic banks

To capture customer and niche market segment.

To compete with conventional banking products

Definitions: - Debit card: A card issued to a customer with available balance in his

account.

Charge card: A card that provides a credit facility up to a ceiling but not

revolving.

Credit card: Revolving credit.

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Benefits

To customer To the Bank

-Convenience -Customer satisfaction

-Cash advance -Profit Mechanism

-Grace period -Network acceptance

[Source: Seminar-Dhaka Sheraton, August 20, 2001]

DEFINITIONS

1. Affinity and Co-Branded Card Program

A program created to offer the issuers the opportunity to issue affinity or co-branded

cards as well as life-style or specialized custom-feature cards targeted at potential

cardholders having common interests or membership in an organization.

2. Affiliate MemberA type of MasterCard member that participates indirectly through an association of

member or a Principal member in the activities of this corporation (for example: by

issuing MasterCard cards or by accepting transaction records from merchants).

3. Bank Identification Number

A unique number, of which the first position is 5, assigned by MasterCard

international to identify member transactions and accounts. The BIN is the first six

digits of a cardholder account number, and it is the second through seventh position of

the 23-digit acquirer's reference number. Also known as the prefix.

4. Banknet Telecommunication Network

The MasterCard worldwide telecommunication network. The primary "data

transport" communications facility that links all MasterCard customers and

MasterCard data processing centers into a single online financial network.

5. Card Validation Code

A two-part security feature. CVC 1 is a 3-digit value encoded on tracks 1 and 2 in

three contiguous positions in the "discretionary data" field of a magnetic stripe on a

MasterCard. CVC2 differs from CVC1 and is indent-printed into the tamper-evident

signature panel on the card. The CVC is intended to inhibit the alteration or misuse of

card data and enhance the authentication of card.

6. Check Digit Routine

An algorithm that is performed on the primary account number (PAN) to ensure that

the numbers were not transposed or miss keyed. The result is the last position of the

account number, or check digit.

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7. Counterfeit Card

An instrument or device embossed, printed, or otherwise bearing MasterCard marks,

so as to purport to be a MasterCard card issued by a member or affiliate. But that is

not a MasterCard card because the embossing or printing thereon was not authorized,

or because the MasterCard card has been altered or re-fabricated, even though it was

validly issued initially.

8. Chip

A piece of silicon etched with electronic circuits. The microprocessor chip has an

operating, a programming, and a data memory that allows internal processing to take

place and provides additional storage capacity.

9. Chip Card (Smart Card)

A Card with logic capabilities and data storage capabilities to enhance card

functionality and security (for example pay telephone cards)

10.EMVA joint project started in 1993. To define global specification for chip-based credit and

debit cards. The EMV specifications are divided into three parts- card specification,

terminal specification, and application specification. The latest version of EMV is

known as EMV2000, Integrated Circuit Card Specification for Payment System,

Version 4.0 December 2000.

Business Card In America:Below are credit cards tailored especially for businesses:

Fleet Platinum Visa Business Credit Card

Save with a 0% introductory APR on purchases and balance transfers for up to sixmonths, and a low variable rate, currently 10.99%, on purchases and balance

transfers thereafter. Generous credit line up to $50,000, online account access,

discounts on business products and services, free additional cards for employees, and

more.

Advanta Platinum Business MasterCard

No annual fee credit card especially for small businesses. Offers credit lines up

$100,000. Get a 0% APR on purchases and balance transfers for the first 9 months

you have the card.

Blue for Business from American Express(r)

Blue for Business from American Express works much like a traditional credit card

with revolving credit line. It offers a 2.9% introductory APR for 6 months, then a

fixed 11.99% fixed rate afterwards. Unlike most Amex cards, there is no annual fee,

and you can extend payments over time. Also offers business discounts at FedEx,

Hertz, Hilton Hotels, Mobil and more. Of course, it also extends the perks American

Express is known for, such as travel accident insurance, car rental insurance, baggage

loss insurance and more.

American Express(r) Business Gold Card

This card offers basically the same features as the Blue for Business card above,although it has a little different payment arrangement. Like most American Express

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cards, you pay off your balance monthly, unless you use the Business Flex program,

which lets you draw out payments over time, but at a higher APR than the card above.

FEATURES OF AN IDEAL CREDIT CARDHOLDER

From the point of view of the bank an ideal credit cardholder is the one havingfollowing features:

Uses the card extensively for purchasing merchandise and services, thus

generating service charge revenue.

Makes use of the credit aspect of the card ideally by perpetually keeping his

or her credit limit near maximum, thus generating interest.

Makes large infrequent purchase, thus reducing processing costs per

transaction. Is not delinquent in making the minimum monthly payments and did not

default and thus reducing bad debt losses.

CREDIT CARD IN BANGLADESH

In Bangladesh three banks have already introduced credit cards. These are Prime

Bank, National Bank, Standard Chartered Grindlays Bank, American Express Bank

issues charges cards only. Very recently Janata Bank a nationalized commercial bank

in Bangladesh has also came up with its own smart card called "Ready Cash". A good

completions swiftly growing up and it is expected that more banks national or

international Government or private will enter the new place of business.

Standard Chartered Grindlays Bank took a pioneering role in introducing creditcards 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 at

the large hotels and restaurant. In 1997 the bank decided to launch full-scale card

operation and very realistically brought a wide range of people under is service

systems. It is now giving a wide range of card services thorough multifarious quality

facilities. Standard Chartered Grindlays Bank issues only local credit card. It has Visa

Silver, MasterCard Silver and MasterCard Gold.

Prime Bank Limited obtained Principal Membership of Master Card International in

the month of May 1999. Within a period of six months, the bank successfully launched

MasterCard-Credit Card, which created a new dimension on its customer service andconsumer financing. Prime Bank Limited is planning to expand their card facilities

even further so that more and more people can be benefited from both the emotional

and functional needs.

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Name of the Institutions Establishment

Period

Brand Credit card

base

Market

Proportion (%)

National Bank Ltd. March, 1997 MasterCard 9000 6.72

Standard Chartered(Grindlays)Bank

March, 199 MasterCardVISA

102000 76.12

Prime Bank Limited November, 1999 MasterCard 10500 7.83

Vanik Bangladesh Ltd. March, 1998 Vanik 8500 6.35

Dhaka Bank Ltd. August, 2001 Vanik 4000 2.98

Total 134000 100

National Bank burst into the world of credit card in October 1997. It has Gold

international and Gold local and Silver international and Silver local. National Bank

Limited first issues International Card in our country. They started to issue local

cards in the year of October 1999.

Vanik a Sri Lanka - Bangladesh joint enterprise has also come forward with its won

credit card service in recent time. It has started its operation in the year 1998. They

have their own card called Vanik Card; one is known as Gold another is Classic.

More and more people are getting interested in credit card facilities. To observe the

success of the credit card operations of other banks, Premier Bank Ltd, Jamuna Bank

Ltd., The City Bank Ltd. and Southeast Bank Ltd have taken measures introduce

their own cards.

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CHAPTER -3

ANALYSIS OF FORM COPPETITOR

MasterCard

VISA

Vanik

MasterCard

Membership:MasterCard is an association nearly 22,000-member financial institution worldwide.

As part of its role in partnership with its members, MasterCard performs such central

functions as:

Creating global and regional marketing programs and promotions to

support

the MasterCard brand

Providing expert systems including secure, reliable, state-of the arttransaction processing

Developing new products, services and technologies

Setting and enforcing politics and standards for card use acceptance

Benefits of MasterCard Membership:Payment cards are a proven means of generating profit and strengthening customer

relationships. Additional benefits of MasterCard membership are access to: --

The known and globally accepted MasterCard brand

An integrated product and service offering that can customize to appeal todifferent types of customers

Reliable and cost-effective transaction processing

Operation

Banknet Telecommunication Network:Banknet, a global MasterCard telecommunications network, lets you communicate

with other members and with MasterCard. It is used primarily send and receive '

authorization, clearing and settlement transactions.

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The MasterCard Banknet provides the following benefits: ~

Flexibility, through an adaptive and reactive renting network

Reliability, through rerouting capabilities and back up facility

Efficiency, through a peer-to-peer architecture and pack let-switching

protocol Expandability with redesign

Intelligence of a distributed network.

Speed (average 2.1- second response time)

Standard Authorization Process:Here is the standard step-by-step procedure for authorizing the use of a

MasterCard card.

Step 1: The cardholder gives the card to the card to the merchant

Step 2: The merchant starts the authorization process by either placing a

call to acquirer or its agent entering the transaction into POS terminal Step 3: The acquirer host computer system sends an authorization request

message to the Banknet network through the acquirer MIP

Step 4: The Banknet network sends the authorization request message

through to the issuer MIP. The issuer host computer (MasterCard Interface

processor)

Step 5: The issuer host computer processes the authorization request and

sends an authorization request response

Step 6: Banknet routes the response to the acquire agent or its agent,

Step 7: The acquirer or agent delivers the response to the merchant

Standard Authorization Flow

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Merchant

Acquirer Host

Mastercar

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In its authorization request response, the issuers can advice the merchant to take one

of the following actions:

Approve

Decline

Capture Card

Refer to Card Issue

Card Program Business

There are two categories of payment card business: issuing and

acquiring. Many MasterCard members participate in both

categories.

An issuing member (issuer)handles all aspects of the cardholder

relationship, including solicitation of cardholders and

maintenance of cardholder's account.

An acquiring member (acquirer) assumes the responsibilities of

the merchant relationship, including merchant acquisitions and transactions

settlement.

Issuer information need:

Estimated number of cardholders.

Projected transaction volume and monetary amount.

Estimated proportion of cardholders who will revolve their account

balance.

Appropriate interest rate and annual fees.

Products needs within your market.

Approximate number of people who will apply for quality for, and use

their

products.

Current market competition.

Cost of conduct card business.

Projected interchange and others sources of revenue.

Projected profit.

Acquirer information needs:

Number of visitors of the to the geographic area and their country of origin

Estimated demographic spending

Estimated number of merchants

Average value of individual goods and services

Average customer purchase

Competitors' merchant discount rate possibilities of renting selling point-

of-sale (POS) equipment

Legal issues

Market potentials Average interchange and other cost

Available technology

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Issuer income:

Fee income

Annual fee

Supplemental card fee

Cash advance feeLate payment fee

Access limit fee

Insufficient fund fee

Enhancement fee

Merchandising income

Interest income:

Billing date calculation

Average daily balance calculation

Posting date calculation

Interchange Income:

International

Domestic

On us transaction

Foreign exchange income

Card Issuance Expenditure:

Cost of funds Losses

Fraud

Credit

Operation and services

Transactional fees

Cash disbursement accommodation fee

Banknet access fee

Authorization service charge

Acquire income

Merchant discount rate

Cash disbursement accommodation fee

Rental / sale or equipment and supplies

Cost of fund

Acquirer business expenditure

Interchange fee

Cost of fund

Operation and processing expense Merchant marketing and services

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Losses

Fraud

Credit

Cardholder decision factors:

(i) Price(ii) Geographical convenience

(iii) International acceptances

(iv) Bank affiliation / loyalty

(v) Enhancement / card product differentiation

(vi) Credit policy

Merchant decision factors:(i) Geographical convenience

(ii) Loyalty

(iii) Pricing

(iv) Payment scheduling and timing(v) Credit arrangement

(vi) Service and support

(vii) Additional service.

Product1. MasterCard Card:

This general-purpose payment card offers unsurpassed global acceptance, letting

customers purchase goods and services at participating merchants.

2. Gold MasterCard Card:

This product targets an upscale market and delivers increased profitability as a resultof greater frequency of use, higher spending, and larger average outstanding balance

3. MasterCard Business Card:

This card offers members incremental revenue and relationship with corporate clients

with members.

4. Co-Branded and Affinity Programs:

This programs help issuer to segment to market and gain additional customers to

incremental volume.

5. MasterCard Travelers Cheques:

Sold by members and through Thomas Cook network locations around the world,

travelers' cheques give consumers a secure, convenient alternative to carrying cash.

6.Maestro POS Debit Program:

The only global, online point-of sales (POS) debit service with a single, unifying

acceptance mark and brand; Maestro provides cardholders a payment alternative to

cash or cheque that is quick, convenient and secure.

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Services:1) MasterCard/Cirrus ATM Network

A single network distinguished by the MasterCard and Cirrus marks, it offers

worldwide cash access 24 hours a day, 365 a year, at Automatic Teller Machine (ATM)

that permit cash withdrawals and other bank services.2) Priority Cardholder Service:

These are the Lost and Stolen Card Reporting (LSR), Emergency Card Replacement

(ECR), and Emergency Cash Advance (EGA) service, which protect all MasterCard

cardholders against improper use of their cards if their cards are lost or stolen, and

provided critical assistance.

3) Master card global service:

This will be a cost-effective telecommunications based service that makes emergency

assistances for cardholders traveling outside their country more accessible.

4) The MasterCard/ Thomas Cook Alliance:

Provides cardholders with access to routine and emergency travel-related service at

Thomas Cook travel and bureaux de charge locating worldwide.5) Card Enhancement service:

Card enhancement provides valuable advantage and convenience for cardholder, offer

members tools to maximize a portfolio's and build brand preference. These services

include

Master Assist Travel Assistance Service

Master Phone Telephone Service

Product and Service Positioning.

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VISA CARD

STANDARD CHARTERED INTERNATIONAL VISA CREDIT CARD LAUNCH

VISA Card: August 2002

PRODUCTVisa Classic

Visa Gold

NUMBER OF CARD30,000 (Both classic and gold)

PER MONTH CARD ISSUEDAverage 1,000 cards; in the year 2000 SCB issued about 12,000 cards.

ISSUANCE / ELIGIBILITY CRITERIA Cardholder between the age of 21 and 70

Cardholder is a Bangladeshi national

Against RFCD Account* Balance (to be kept under lien)

Against Exporter's Retention Quota FCY Account* Balance (to be keptunder lien)

Maintained in any Bank.

Card cannot be issued to more than top 3 executives of

any exporting firm.

All cards issued to the top executives of an exporting firm

must be taken from only one issuing bank.

CREDIT LIMIT

Card Type Minimum Limit Maximum Limit

Visa Classic (426376) US $ 500 US $ 4,500

Visa Gold (426378) US $ 5,000 US $ 20,000

LIEN AMOUNT

Card Type Credit Limit Lien Amount LTV

Visa Classic

(426376)

US $ 500 US $ 556 90%

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US $ 2,500 US $ 2,778 90%

US $ 4,500 US $ 5,000 90%

Visa Gold

(426378)

US $ 5,000 US $ 5,556 90%

US$ 10,000 US$ 11,112 90%

US $ 20,000 US $ 22,223 90%

FEATURES / BENEFITS

Worldwide recognition and acceptance Accepted in more than 150 countries around he world including Bangladesh.

Accepted at over 18m establishments worldwide including 3,000 merchant in

BD

Accepted at over 556k ATMs worldwide displaying the Visa log

Accepted at over 398k visa member offices worldwide.

Easy and flexible credit and repayment options

Maximum 45 days interest free period

Monthly minimum repayment of 5% or US $10, whichever is greater

Instant cash advance up to 50% of the credit limit.

Service & Price GuideInternational International

Visa Gold Visa Classic

General Payment due date 15 days 15 days

from statement date

Minimum amount due 5% or $10 whichever is higher

Cash advance 50% of credit Limit

Maximum interest free 45 days 45 days

days available(incase of 100% payment of current

balance on or before due date)

International International

Visa Gold Visa Classic

Fees

Annual Fee (US $) 120.00 70.00

Annual fee forSupplementary card (US $) 60.00 35.00

Card replacement fee (US$) 15.00 15.00 (per card)

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Other fees & charges (all cards)

Finance charge on all transaction types, calculated from statement date

till repayment date

(calculated on average daily balance method) 2.5% per month (30days)

Over limit charge (US $) 15.00

15.00

Late payment charge (US $) 15.00

15.00

(If minimum due is not paid within Due Date)

Duplicate statement (US$) 5.00

5.00

Returned cheque (US$) 15.00

15.00

Outstation cheque processing (US $) 10.00

10.00

Copy of sales voucher (US$) 15.00

15.00 (up to a maximum of 3 months)

Certificate charge (US$) 15.00

15.00

Cash Advance fee 2.5%

2.5%

Safe and secure Photo-sign feature

Cardholder protection in case of loss/stolen report

24-hour customer service

Supplementary cards

Four supplementary cards on one account

Separate spending limits for supplementary card(s)

Replacement of only supplementary card(s) in case of lost / stolen

/damage.

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VANIK

Vanik a Sri Lanka - Bangladesh joint enterprise has also come forward with its won

credit card service in recent time. It has started its operation in the year 1998. They

have their own card called Vanik Card; one is known as Gold another is Classic. It has

now 9000 (Apx.) cardholders in credit card market.

Vanik- Dhaka BankDhaka Bank has introduced new products like Credit Card, ATM Card and

Automatic Phone Banking service in selected branches in recent years. Dhaka Bank

Credit Card has earned wide acceptability and reputation within a very short time.

The bank has developed the process such mat it can deliver the Credit Card within

only seven days against security: for unsecured card it takes only ten days. It has also

networked at all branches in Dhaka, Chittagong, Sylhet, Narayangonj and Savar. To

offer any branch banking facility for the convenience of the customer.

Dhaka Bank at a Glance:

Opening of the Card Business

August 2001

Human resource

Executive -3, Non-executive -8

Card Base:

4000 (40% Gold Card and 60% Classic)

Per month Issued Card:

230 (Average)

Credit Limit:

Tk. 10,000 to 49,000 = Classic Card

Tk. 50,000 to 1,00,000 = Gold Card

Customer Positioning:

Bill payment in Petrol Pump, and Auto Debit facility (Grameen Phone, Citycell). They

are also going to deal with North South University where the students will pay their

fees in Vanik Credit Card.

Marketing Activities:

20% of their income from Card goes to marketing expense. They have 15 DSAs and

card selling through branch is one of their main Cards selling effort. They expand a

large share for advertising of Cards.

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Chapter 4

ANALYSIS OF INDUSTRY COMPETITOR

National Bank Limited

Standard Chartered Bank

Prime Bank Limited

NATIONAL BANK LIMITED

Establishment and Operation:

National Bank Ltd. has been established in 1983. It is working as a well-established

reputed commercial bank in Bangladesh. A long termed vision governing body and

skilled human resources is the main reason to get this position.

Chairman : Abu Taher Mia

Managing Director : Rafiqual Islam Khan

Company Secretary : Md. Abdur Rahman Sarker

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Objective:

To maximize the facilities to the client and shareholders in

systematic way

Expand the multinational service in economic sector to

reach the mass people To ensure the maximum utilization of manpower by

increasing efficiency and growth of productivity

To encourage saving attitude in different classes in the

society

To gain confidence by easing the international transaction

in internal trade

Analyzing the realistic demand by consumers' needs and

provide short and long-term finance.

To activate the capital market by facilitating the banking

system Utilizing the latest technology for the best service to the

customer.

To bring and strengthen banking discipline and thus

creating the long-term compatibility with the customer by giving

the best service

To improve the corporate image in home and abroad.

Present Company Financial Position at a Glance:

(Tk. inmillion)

Year 2002 2003 2004 2005

Authorized Capital 1000.00 1000.00 1000.00 1000.01

Paid up Capital 396.16 430.27 430.27 430.29

Income 1808.66 1871.54 2988.90 3285.01

Expenditure 1407.69 1667.95 2064.75 2268.4:

Net Profit before Tax 400.97 203.59 333.75 400.6

Assets/ Liabilities 33617.50 36545.28 47148.08 48732.1

Branches: 75 all over the country

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Card Division:

i. Establishment: March 1997

ii. Human Resources:

a. Executive : 3

b. Non Executive : 37c. Technical : 3

Total : 43

iii. Card Base:

a. Gold Card : 2000

b. Silver Card : 7000

Total Card : 9000

iv. Trend Analysis:

Year 2002 2003 2004

Issued Card 2000 2700 1400

Surrendered Card 43 58 63

Income from Card (in million Tk.) 45.00 95.00 85.00

Marketing Expenditure (%of income) 10 5 2

POS Machine (no) 20 210 325

Merchant 125 425 700

iii. Target People to be served:

Mainly salaried person

Income Tk. 10000 or more selected for silver card, if other thing remain same.

More than Tk. 55000 or more selected for gold card.

For international card the prospect cardholder have to open a RFCD account

Card is issued in security basis.

iv. Customer Positioning:

Price and Competitive offering is the key focal point of offering. NBL card has

the following options:

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Acceptance: An international MasterCard from National Bank Limited is

accepted at million of establishments across the world and home including 5-star

hotels, restaurant, departmental store and establishments offering diverse services.

Security: When a NBL MasterCard holder automatically covered under

Personal Accident Insurance against loss of life for as high as tk. 5 lakh in case of airtravel free of cost.

Credit Cushion: It has revolving loan facility. You can avail a free credit facility

from 15 days if you settle your full dues within payment due date.

In Case of Lost Card: If a Card holder lost his card he have to report to the

Credit Card Division and they will provide a replacement card on payment of

prescribed fees. Card Division is open 24 hours a day, 365 days a year.

Supplementary Card Facility: A Cardholder can get supplementary card for his

relatives. The expense of supplementary card will charged to the account of principal

cardholder.

Cash Advance:Cash drawing facility through approved channels is available in

some cases to meet your emergency requirement at a prescribed fee.

Need not Pay Fluffy at a Time:NBL gives the opportunity of being flexible in

repayment schedule suiting to convenience of cardholders.

No Interest or Charges: Payment in full within the payment due date and enjoy a

free credit facility from 15 days to 45 days.

vii. Merchant Commission:

2% to 3% (average 2.8%) on agreement basis.

viii. Marketing Activities:

a. Number of DSE : Nil b. Advertising Exp. : 5% c. Merchant Marketing: 3 people

NBL maintain strong personal relation with its cardholders and merchant by giving

prompt and customize service. They believe relationship marketing is key success to

gain customer loyalty.

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STANDARD CHARTERED BANK

Establishment and Operation:

The early years:

Standard Chartered is named after two banks when merged in 1969. They were

originally known as the Standard Bank of British South Africa and the Chartered

Bank of India. Australia and China of the two banks, the Chartered Bank is the older

having been founded in 1853 following the grant of a Royal Charter from Queen

Victoria.

Standard Chartered today:

Today Standard Chartered is an international bank focused on the merging markets

in which it has worked for over 100 years in Asia, Africa, the Middle East and Latin

America. It has a network of over 500 offices in more than 50 countries, and its

headquarter is in London.

In Bangladesh:

The Chattered Bank opened in Chittagong in 1948, which was, at the time, the eastern

region of newly created Pakistan. The branch was opened mainly to facilitate the post-

war re-establishment and expansion of South and South East Asia. The Bank opened

its first branch in Dhaka in 1966 and shifted its headquarter from Chittagong to

Dhaka after the birth of Republic of Bangladesh in 1971. At present, the bank has 28

branches over the country by acquiring ANZ Grindleys Bank (2000).

Objective:

Vision: To be renown as the top performing banking group serving Australia, New Zealand

and

in the international market.

Mission:Standard Chattered bank credit card division mission statement states, " Touch the

power"

SCB is a banking and financial services group that aims to be an outstanding financial

institution providing a broad range of services in the banking and non-banking

financial sectors.

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Values:The Bank holds the following values:

To have a strong customer focus and to build a relationship based on integrity

superior services and mutual benefit.

To strive for profit and sound growth.

To work as a team to serve the best interest of the group.

To work for continuous business innovations and improvements.

To value and respect people and make decisions based on merits.

To provide recognition and rewards on performance.

Branches: 18 all over the country.

Card Division:

i. Establishment: March 1995 [ANZ Grindlays Bank]ii. Human Resources:

a. Executive : 26

b. Non Executive : 300

c. Technical : 2

Total : 328

iii. Card Base:

a. Gold : 10000

b. Silver : 60000

Total : 700000

iv. Trend Analysis:

Year 2003 2004 2005

Issued Card 6000 10000 38000

Surrendered Card 120 208 320

Income from Card (in million Tk.) 120.00 170.00 300.00

Marketing Expenditure (%of income) 20% 10% 15%

POS Machine (no) 220 350 500

Merchant 1400 2100 3500

Table: Annual Report of Standard Chartered Bank

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v. Target People to be Served:

Segmentation profile:

Geographic:

Primarily located in major urban areas/ centers of the country i.e. Dhaka, Chittagong,

Khulna, and Sylhet.

Demographic:

Age: 18 to 70 years

Income: Monthly minimum 10,000.00 and/or above

Education: Graduates

Profession: Executives, govt. officials, defense personnel, housewives, entrepreneurs/

businessman.

Psycho graphic:

Life style:

Mobile, sociable high achievers, motivated by status, style conscious, exposed of

international media /lifestyle, English is first language after Bangla.

Attitude-aspiration attracted to international offers, progressive, independent.

v. Operational Structure of Card Service Division:

The Cards Services Division (CSD) has six units namely, Risk Assessment, Collections,

Merchant Services, Operation Services, Issuing Services continuously corking on

improvement and wide acceptance of Standard Chartered cards. A manager whoreports directly to the Head of Cards heads each of these units. The Head of Cards is

responsible for overall operation of CSD. A sales team known as Direct Sales Agents,

work alongside these units to build up the customer base.

a. Risk Assessment:It is the section where the applications for new cards are received or limit

enhancements are approved. This department determines eligibility of the applicants

on the basis of the information provided by the applicant with the relevant documents.

For example, if the applicant is a service holder then he/she has to submit his/her

salary certificates, on the other hand, if he/she is a businessperson then he/she has to

submit income tax return certificate. On the Basis of these documents, the risk

assessment department screens out those applicants who are not eligible. This

department uses the services of a consultancy firm (third Party) to assist in the

verification process. Once the applicant is selected to be eligible for a credit card, an

initial credit limit is set. This limit is extended on the basis of customer instruction

after six months of use and is supported by the customer's financial capability.

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b. Collection:This department deals with the collection process. The collection process of credit card

starts when the cardholder has failed to meet on or more contractual payments (i.e.

minimum 10% payments) or exceeds the allocated credit limit or both in which case

the cardholder becomes a delinquent. It therefore becomes the duty of the collections

department to minimize the outstanding delinquent receivable and credit losses. Thecollection process involves the following:

Services (updating status).

Issues bills to customers and remind them the due date of payments.

Locates and reminds defaulters of their obligations.

Legal enforcement in case of grosses default.

c. Merchant Services:A merchant is a shop, outlet, hotel or restaurant that accepts credit card. This

department, also known as Acquiring Department, brings in new merchants to expand

the business of the credit cards. The basic job of this department is to encourage thesellers to accept the credit cards and if they agree they become merchants of Stan chat.

This department also takes up promotional activities to boost up the transactions at

the merchant stores and sets up POS terminals to make credit card transactions easier

and quicker.

d. Operational Services:Basically this department deals with the payments and data submission related to the

credit cards. For each transaction the Operations Department processes the customer

sales, prepares the bills for the customers, gives authorization to the merchants about

the acceptability of the cards, deals with excess usage beyond credit limit and arranges

to settle payments to the merchants. Among other tasks this department also prepareswarning bulletin for merchant to prevent fraudulent transactions and take actions

against any such case.

e. Customer Services:Customer Services department deals with customers in the following manners:

Issuance of approval letters, decline letters, renewed letters, replacement

letters and enhancement letters.

Issuance of credit cards and personal identification numbers (PIN).

Issuance of renewed and replacement cards and PINs.

Answering customer queries.

Mitigating discrepancies regarding bills/payments.

Handling customer instructions such as reporting lost card.

f.Issuing Services:The Issuing Department of CSD has the responsibility and accountability of issuing

debit cards for account holders while providing services through Nigh & Day Banking.

Debit card is a plastic card by a bank to enable its customers with checks accounts to

pay for goods and services at certain retail outlets by using the telephone network to

debit their check accounts directly.

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Presently the Cards Service Division (CSD) of Stan-Chat bank is issuing debit card

known as ACCESS Card. The Bank has installed Automated Teller Machines (ATM)

almost two years ago for the benefit of its debit cardholders. From the ATM debit

cardholders can withdraw cash withdraw cash against their account at any time of the

day or night. At present (June 2000), Stan-Chat has issued around 55000 debit cards

for its account holders.

vi. Customer Positioning:

According to the management the core features involves 3 C's

C - clean leading

C - convenient

C - cash advantage

Standard chartered credit Card comes with a winning combination of value- packed

features and benefits.

Wide acceptance:

Standard chartered Credit Card is accepted at more than 3,500 outlets around the

country.. You can use your Card for everyday purchases as well as for high value

purchases. Our wide range of merchants include hotels, restaurants, airlines & travel

agents, departmental stores, hospitals and diagnostic centers, jewelry shops,

electronics and computer shops, leather goods, mobiles and internet service providers

and many more. This number is increasing everyday to cater to your growing needs.

Easy Credit

With Standard Chartered Credit Card you have the convenience to pay as little as 5%

of your outstanding on the Card account every month, thus having the power and

flexibility to plan your payments.

Instant Cash Advances

Standard Chartered Credit Card gives you access to cash up to 50% of the credit

limit. You can withdraw cash advances from all Standard Chartered ATM's around

the country, thus having access to cash 24 hours a day. Besides, cash advance can also

be taken from any of our branches across the country.

Safe and Secure

You do not need to carry cash anymore if you are carrying Standard Chartered Credit

Card. If you loose your card, you are protected against financial charges from themoment you report the loss to us.

Air Accident Insurance

The Standard Chartered Credit Card gives you free air accident insurance coverage

upto Tk. 100,000 (for Silver Card) or Tk. 500,000 (for Gold card). This coverage is also

applicable for supplementary Cardholders.

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Supplementary Card

You may apply for Supplementary Card(s) for your spouse, parents, sisters, brothers,

friends or children over 18 years of age. All ch

Documents

Final Internee