Asian high net worth individuals are a battleground for firms selling top-end credit card brands.

Who needs bronze, silver or gold when you can have the elitist form of plastic? A new report (Global Information Inc., 2013) says that the surging population of high net worth individuals is driving the battle between premium credit card brands.

In other research, Boston Consultancy Group said China is likely to become the largest online retail market in the world, estimating that by 2013, its e-commerce market will triple in value to $360 billion. This indicates there will be a boost in demand for credit cards to facilitate the emerging internet shopping habit. And, reflecting Asia Pacific's growing wealth as a region, Visa’s Commercial Consumption Expenditure index (2012) said APAC reported the largest share of global CCE spend, reaching $38 trillion, up 14.9 per cent from the previous year. With these figure in mind, it seems there is plenty of room for premium credit card brands to snap up their share of Asia’s expenditure.

To get some insight into the premium credit card industry and its developments, WealthBriefingAsia spoke to American Express and Quintessentially, firms operating in the space of acting as allies to the wealthy. It also looked at other companies operating in this sector.

At American Express, Rachel Yeow, vice president and head of consumer card products and marketing at the firm, told this publication: “The affluent customers we serve are individuals who have extraordinarily busy and demanding lifestyles, who value and require the ultimate in attention and service, who demand personalised service and flexibility, and who want access to the inaccessible.”

She referred to AMEX’s iconic Centurion card and how it works as part of the firm’s overall offering to clients.

“[Centurion is] the world’s most prestigious and titanium-made card product, that is by invitation only to American Express’ super affluent and discerning customers,” she said.

Yeow said recent research by consultancy firm, Mckinsey and Company, predicts that Asia will account for two-thirds of global growth over the next few years, making up 40 per cent of global payment revenues by 2015. Hence the launch of the Centurion card in Hong Kong in 2000 seems quite timely.

She shared some examples of one-of-a-kind experiences that the firm offers its super-wealthy spenders:

“We brought in world-renowned chef, Heston Blumenthal, from his Michelin Star restaurants in the UK to Hong Kong to host a very special and private event for our card members.  Known for an unconventional and questioning approach to culinary ideas, Heston demonstrated a series of food experiments face-to-face with an enthralled audience who were able to participate and sample an extraordinary yet delicious dinner.”

Yeow and her team have also arranged a variety of overseas events for local card members’ entertainment, including access to the best seats at international events like Formula One, Wimbledon, London Fashion Week, and Mercedes Fashion Week in New York.

Can’t afford to miss out

“I think with the rapid emergence of affluent individuals in this part of the world, it will be extremely unwise if any bank/credit card issuer is not doing anything to capture the opportunity,” said Vincent Lai, managing director, Greater China, at Quintessentially.

Having formerly led travel and lifestyle services at American Express for its Centurion and Platinum card members in the Greater China region, Lai says he knows how to play his cards right.

What’s fuelling the demand for premium plastic is the “birth rate” of new millionaires, Lai said, emphasising that young and aspirational ultra-high net-worth individuals are key to the growth of the market.

“A card in your wallet, which you’ll use almost every day, is always a great way to generate brand loyalty and emotional connection. The bank/issuer wants this to be so strong that they would be the UHNW individual’s only financial services provider, for them personally, and also their businesses commercially,” Lai said.

However, what is important to note is that this consumer segment, especially on the younger scale, doesn’t view these exclusive credit cards as a payment method, but as a lifestyle accessory.

“These people want to be ‘in the know’, be seen at grand openings, have access to chic and exclusive events and parties,” Lai said, referring to the competitive perks different brands offer.

Competitors

The market for such cards is hotting up. Besides the AMEX product already mentioned, the ICICI Bank Diamont card (by MasterCard) offers a host of hot offers, such as access to private islands, yachts, jets and super-cars, along with entry to exclusive movie premieres and complimentary tee-offs at 100 golf courses across the world. And to add to its wealthy members’ smugness, it’s also invitation only.

The Visa Infinite card encourages “unreasonable requests” – on its website it says: “You’re in Sydney, you’d like to play golf, you don’t have any clubs with you, and actually you’ve never got around to learning how to play. So what’s the problem?” Presumably they can’t make you the next Rory McIlroy but surely, for the right price, they could arrange a one-on-one lesson.

The opportunity

However, despite all these seemingly irresistible perks, Quintessentially’s Lai said the market is not nearly saturated, leaving lots of untapped pockets up for grabs: “In Hong Kong and Singapore we usually talk about an average person holding five credit cards but at the UHNW level it is just around two.”

He added: “The thing is, this group of people is very loyal and most of them keep a very low profile. Don’t be surprised if a lot of UHNW individuals don’t actually have a credit card, and even if they have one, they may not use it every day.”

While to Lai the opportunity seems obvious, he implies that banks are missing the big picture. Looking at China, which is recording the fastest growing number of millionaires, he said the banks/card issuers are not working fast enough to meet their needs. And in more mature markets, such as Hong Kong and Singapore, one may hear from the industry that they are cannibalising each other in competition; but in Lai’s view, there’s a whole new world out there in terms of capturing payment opportunities for the UHNW individuals.

“If they [banks] just go to their clearing desk and look at how many large ticket cheque transactions are made every day, they roughly will know what I’m talking about, Lai said.

“The opportunity is right at the door step but it is a game of how to motivate ultra-high net-worths to put the charge on a credit card, and the merchants’ acceptance of it. I don’t say this is easy but if the dots are connected, the industry will benefit from this in a great way,” Lai continued.

Connecting the dots

Having first-hand experience in the industry, Lai is excited to see the many innovations in this space, referring to emerging payment means like online, near-field communication and mobile becoming more widely accepted. “The transformation of the product [premium card offering] is about how to continue to break into untapped market, while staying ahead of the emerging competitors that can beat the big boys overnight through innovations and fast adoption,” Lai said.

Meanwhile, Yeow at American Express is more than confident about AMEX’s place in the industry: “American Express sets and re-defines industry standards for premium cards.”

“(Our) global footprint and leading customer service delivery offers us a strong competitive edge in the affluent space. We believe our business model is well-positioned to capitalise on the growth opportunities in the payment sector,” she added.