Indonesian credit card issuers brace for tougher competition

Credit cards in circulation in Indonesia is expected to grow by around 17 million this year.

This is a five percernt increase from 2012.

The modest growth is attributed to a Bank Indonesia regulation on credit card ownership limitation.

“The regulation has taken effect since this January. Credit card issuers and customers have two years to adjust to it. By 2015, it will have to be fully implemented,” Indonesian Credit Card Association general manager Steve Marta said.

Based on the regulation, issued by BI in June 2012, people whose monthly income is between Rp 3 million (US$310.56) and Rp 10 million are only allowed to have a maximum of two credit cards.

“As a result, credit card issuers will face tough competition among themselves to prevent customers from closing their own existing card accounts. At the same time, they have to compete to be the one chosen by new customers,” he said.

As of December 2012, there were around 7.8 million credit card holders, 15.7 million credit cards and 19 credit card issuers in Indonesia. Regular accounts made up for about 70 percent of the total number of cards, while

premium accounts contributed 30 percent, according to AKKI data. The top five credit card issuers were BCA, Bank Mandiri, BNI, Citibank and CIMB Niaga.

Competition will also be heightened by the return of Citibank Indonesia to the credit card market. The return is scheduled to take place in the second quarter of 2013. Citibank was banned from issuing new credit cards for two years following the death of one of its credit card customers.

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