While American Express has usually been the preferred credit card option for affluent customers in the Asia Pacific region, some others have started to focus on this profitable segment. Mainly, it is MasterCard and local banks.
According to our Credit Card Customer Analytics, loyalty points and rewards account for just over 9% of the factors driving the choice of credit cards in 2015/2016 globally; air miles and airline rewards account for majority of the rewards.
Canada reported the highest share of consumers for whom air miles and airline rewards are important factors behind the choice of credit cards (16.6%), but Hong Kong and New Zealand were ranked the highest among Asia Pacific countries.
These figures show that Asia Pacific is an important region for credit card providers to target consumers through credit card rewards, as a result of this region’s affluent segment growing in influence within the global commerce environment. MasterCard estimated that by 2020, Asia Pacific will have the largest population of high-net-worth Individuals, with an expected annual growth rate of 10.3% in 2017.
Hong Kong traditionally provided a strong commercial incentive for credit card providers to expand their business in the region due to favourable demographics and significant growth in the number of wealthy individuals. This is confirmed by our Credit Card Customer Analytics, which shows that 15.6% of Hong Kong consumers selected air miles or airline rewards as a reason of credit card choice, more than double the global average (6.7%), while New Zealand, Australia and Singapore also have a proportion above the global trend.
While American Express has been one of the most widely held card schemes among high-net-worth individuals, competition has recently intensified in Asia Pacific with MasterCard redefining its affluent benefits strategy in Asia Pacific with a wide range of benefits available for Mastercard Platinum, World and World Elite cardholders across the following pillars: Travel, Dining, and Peace of Mind, its complementary e-commerce and wallet insurance.
American Express is also facing a fierce competition not only from MasterCard, but also from local and international banks. In order to effectively compete with these players in Asia Pacific, MasterCard need to focus its efforts on Hong Kong as the most promising market, due to its affluent population but also extend its influence in the markets with a significant potential for growth in credit cards for the affluent (e.g. New Zealand, Singapore and China). Partnering with merchants that serve this segment might constitute an important part of the strategy in Asia Pacific.
Factors behind the choice of credit cards in 2015/2016:
Air miles or airline rewards in Asia Pacific compared to global trend
Source: Verdict Financial’s Credit Card Customer Analytics 2016