Platinum Credit Cards in Australia 2004

SUMMARY

Scope and coverage of the brief

• Examines a small but growing segment of the Australian credit card market
• Profiles the four platinum cards currently issued in Australia
• Covers platinum and super premium cards issued elsewhere in the world
• Based on interviews with industry executives and extensive secondaryresearch

Key findings and brief highlights

• Launching a platinum credit card is a viable strategy in the currentcompetitive environment. Adding a platinum card strengthens a credit cardportfolio and means that a card issuer can continue to offer an attractivereward scheme to those consumers who most demand such a scheme and who arewilling to pay for it.
• The Commonwealth Bank card launch will fuel growth in the platinum cardmarket. If it leads to other card issuers offering cards that are notinvitation only, it will also threaten the notion of \'exclusivity\' thathas until now been associated with platinum cards.

Reasons to buy this brief

• Learn how the platinum card market is likely to develop in Australia andidentify key opportunities at this end of the credit card market
• Benchmark the four platinum credit and charge cards currently issued inAustralia
• Identify the main challenges facing platinum card issuers now and in thefuture

TABLE OF CONTENTS

ABOUT DATAMONITOR

CHAPTER 1 INTRODUCTION

How to use this report

Who is the target reader

CHAPTER 2 MARKET CONTEXT

Platinum credit cards explained

Platinum cards offer a range of staple benefits

Platinum cards are the most exclusive cards currently issued in Australia

On a global scale other cards are more exclusive than platinum

The Infinite Card comes to Asia

Australian credit card balances have hit a record high

New records were set in 2003

The number of Australian credit card accounts is now nearing 10 million

Major changes are on the cards

The Reserve Bank turns its attention to the credit card industry

New interchange fee structures are introduced

Lower interchange revenues will make it harder for card issuers to fundreward schemes

Greater competition in the Australian credit card market is now likely

Responding to the new competitive environment

Cut back reward schemes

Increase annual fees

Issue low rate cards

Partner with the charge card companies

Launch a platinum credit card

Card issuers should consider platinum

The advantages of issuing platinum credit cards

The 'one size fits all card model' is dead

Low rate cards should be launched but it is hard to remain competitive atthat end of the market

Platinum cardholders are loyal and very profitable

A way to reward most valued existing customers

A way to differentiate and stay away from price based competition

Gold has been discredited, platinum is the way forward

Platinum has now gone the way of gold in the UK

Card schemes provide benefits cost effectively

A way to complete a portfolio of products aimed at wealthy consumers

The platinum card customer base

Australians with liquid assets of more than US$50,000 now number more than1.1 million

Affluent individuals have total liquid assets of more than US$309 billion

Platinum cardholders may still want to use their card for borrowingpurposes

Conclusion

CHAPTER 3 COMPETITIVE DYNAMICS

Platinum card profiles

The American Express Platinum Card

A charge card but with a flexible repayment plan

A high annual fee even by platinum standards

The Citibank Platinum Visa or MasterCard

Citibank is well positioned to grow its presence in the Australian creditcard market

The St George Private Bank Platinum Visa Card

Commonwealth Bank Platinum Visa

Commonwealth Bank puts rates into quarantine

An appropriate response to the interchange reforms

Conclusion

The Commonwealth Bank Platinum Card is the 'stand out' product in theAustralian platinum cards market

Card issuers must work to ensure that the platinum card market is not avictim of its own success

CHAPTER 4 APPENDIX

Definitions

Balances outstanding

Charge card

Credit card

Interchange

Platinum credit card

Relevant readings

Briefings

Reports

Future readings

Briefings

Reports

Relevant links

Datamonitor's custom research capabilities

SPP writing team

How to contact experts in your industry

List of Tables

Table 1: Australian credit card balances outstanding, 1994-2003

Table 2: Number of credit card accounts in Australia with and without aninterest free period, 1994-2003

Table 3: Number of platinum credit cards in the UK, 1999-2003e

Table 4: Number of individuals in Australia, segmented by US$ liquid assetband, 000s, 1998-2002

Table 5: Aggregate liquid assets owned by affluent individuals inAustralia, segmented by US$ liquid asset band, US$ Billion, 1998-2002

Table 6: The tail of the tape on the American Express Platinum Card

Table 7: The tail of the tape on the Citibank Platinum Visa/MasterCard

Table 8: The tail of the tape on the St George Private Bank PlatinumVisa/MasterCard

Table 9: The tail of the tape on the Commonwealth Bank Platinum Visa card

List of Figures

Figure 1: Various credit card products are now offered by the majorschemes ranging from standard cards to super premium products such as VisaInfinite and MasterCard World

Figure 2: Balances outstanding on Australian credit cards amounted toAUS$24.1 billion at the end of 2003

Figure 3: December 2003 saw credit card balances outstanding increase byAUS$0.8 billion, the largest increase in monetary terms since records began

Figure 4: The number of credit card accounts in Australia is now nearing10 million

Figure 5: New interchange fees introduced at the end of October 2003

Figure 6: Datamonitor estimates that in 2003 there were more than tenmillion platinum credit cards on issue in the UK. Visa accounted for morethan 70 per cent of these

Figure 7: Individuals in Australia with liquid assets of more thanUS$50,000 numbered more than 1.1 million in 2002

Figure 8: At the end of 2002 affluent individuals in Australia had totalliquid assets of US$309 billion

Figure 9: Datamonitor's core consulting capabilities