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 merchants using 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 MasterCard Network 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 payment via 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 the MasterCard 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 Customers HSBC 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

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 Corporation 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 promotion leaflet only state the advantages of applying the card Need to get the details Easiest: Hang Seng The most difficult: DBS

Annual fee

HSBCHang Seng Bank Bank of China Standard Chartered Bank DBS Bank Chong Hing Bank Wing Lung Bank HK $220 HK $240 HK $220 HK$250HK $250 HK $220 HK $220 HK $110 HK $120 HK $110 HK$125HK $125 HK $110 HK $110

Over credit limit charge

HSBCHang Seng Bank Bank of China Standard Chartered Bank DBS Bank Chong Hing Bank Wing Lung Bank HK $130 HK $130 HK $100 HK$130HK $100 HK $120 HK $150

Lost card replacement fee

HSBCHang Seng Bank Bank of China Standard Chartered Bank DBS Bank Chong Hing Bank Wing Lung Bank HK $100 HK $100 HK $100 HK$30HK $100 HK $50 HK $100

Late fee

HSBCHang Seng Bank Bank of China Standard Chartered Bank DBS Bank Chong Hing Bank 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

HSBCHang Seng Bank Bank of China Standard Chartered Bank DBS Bank Chong Hing Bank Wing Lung Bank 28.52%24%30% (min. $5) 34.2%30%Visa: 36.79% Master Card: 35.89% 36.47%

Request copy of card statement fee

HSBCHang Seng Bank Bank of China Standard Chartered Bank DBS Bank Chong Hing Bank Wing Lung Bank Latest 3 months: fee of charge

Future:- The future trends of credit card

counterfeit banknotes cashless society the weakness of the credit card embedded an integrated circuit

END Q and A SECTION