Chile’s cards and payments industry underwent a transformation during the review period (2010-2014), helped by the entrance of multinational banks, government initiatives such as the financial inclusion programme, and infrastructure modernisation. As cheque use has declined, debit and credit cards have benefited. Government efforts to provide basic banking and financial services to the unbanked helped a large proportion of the population to become banked, which also benefited the industry. According to the World Bank’s Global Findex, its global financial inclusion database, the percentage of individuals aged over 15 with an account grew from 42.2% in 2011 to 63.3% in 2014.

Changing lifestyles, and rises in the economically active population, disposable income, the popularity of online shopping, and acceptance of cards at retail outlets supported the growth of payment cards during the review period, a trend that is anticipated to continue over the forecast period (2015- 2019).

With the adoption of contactless technology, the Chilean payment cards market is projected to grow at a healthy rate in both volume and value terms over the forecast period.

CuentaRUT supported the growth of the debit card market
The government-owned bank BancoEstado offers CuentaRUT, a debit account primarily for the low-income population who do not qualify for conventional accounts. There are no maintenance charges associated with the account. Documentation is minimal, and it is available to the entire population.

Accounts can be easily opened in person, by telephone, online, or through bank¬ing agents, contributing to their popularity among Chilean consumers. Account holders are issued debit cards, which will increase the debit card market’s volume and value growth over the forecast period.

There were 7.4 million CuentaRUT account holders at BancoEstado as of 2014, representing 41.6% of Chile’s total popula¬tion. However, the CuentaRUT is anticipated to face competition from the Chile Account, a new checking account introduced by Banco de Chile in November 2014, aimed at the low-income and unbanked populations.

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Growing preference for both bank-issued and private label credit cards
Growing employment and disposable incomes led to increased demand for consumer credit, fuelling demand for credit cards. A decrease in interest rates on consumer credit also facilitated demand for credit cards during the review period. According to central bank statistics, the average interest rate on credit card consumer loans fell from 34.3% in January 2013 to 24.0% in December 2014.

Another important review-period driver of credit card transaction value and volumes is the option to convert purchase amounts into monthly instalments. BBVA Chile offers six-to- 12-month instalment facilities for purchases at Enjoy hotels and restaurants. Banco Santander Chile and BancoEstado also offer installment facilities to credit cardholders.

However, credit card issuers in Chile face competition from private-label credit cards, for which qualification criteria tend to be much less stringent than for bank-issued cards. As a result, retailers in Chile have long had much greater access to the sizable unbanked population. Several large Chilean retailers not only have wide store networks, but also operate travel and insurance agencies, and have wider customer bases as a result.

Branchless banking model to increase payment cards penetration
Branchless banking is expected to increase the volume of payment cards over the forecast period. For instance, BancoEstado offers its services through Caja Vecinas banking terminals, enabling it to serve consumers over extended hours, including Saturday and Sunday. This channel differentiates the bank from others that normally operate five hours per day, five days a week. Caja Vecinas offers all normal banking products, and enables individuals in remote areas to conduct transactions through POS terminals in retail stores. Caja Venicas is expected to play a major role in extending card-based payments to the country’s rural population.

Chile Country Survey