Switzerland’s Cards and Payments Industry Emerging Opportunities in Switzerland’s Cards and...

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Emerging Opportunities in

Switzerland’s Cards and

Payments Industry

Market Size, Trends, Factors, Strategies,

Products and Competitive Landscape

Product Code: VR0912MR

Published Date: April 2013

TABLE OF CONTENTS

Emerging Opportunities in Switzerland’s Cards and Payments Industry

© Timetric. This product is licensed and is not to be photocopied Published: April 2013

TABLE OF CONTENTS

1 Executive Summary .............................................................................................................................. 6 2 Market Attractiveness and Future Prospects of the Cards and Payments Industry ...................... 7 3 Analysis of Switzerland’s Cards and Payments Industry ............................................................... 10

3.1 Infrastructure Factors ............................................................................................................................ 10

3.1.1 Rising usage of web-enabled smartphones and tablets ....................................................................... 10

3.1.2 Increasing number of POS terminals..................................................................................................... 12

3.1.3 Growing number of ATMs ...................................................................................................................... 13

3.2 Business Factors ................................................................................................................................... 14

3.2.1 Retail sector dynamics .......................................................................................................................... 14

3.2.2 Steadily growing B2C e-commerce ....................................................................................................... 14

3.3 Other Growth Factors ............................................................................................................................ 15

3.3.1 Urban versus rural population ............................................................................................................... 15

3.3.2 Changing lifestyles and spending habits ............................................................................................... 15

3.4 Card Fraud Statistics ............................................................................................................................. 16

3.5 Regulatory Framework .......................................................................................................................... 17

3.5.1 SEPA card framework ........................................................................................................................... 17

4 Emerging Consumer Attitudes and Trends ...................................................................................... 18

4.1 Market Segmentation and Targeting ..................................................................................................... 18

4.1.1 Retail customers .................................................................................................................................... 18

4.1.2 Corporate sector .................................................................................................................................... 18

4.2 Consumer Preference ........................................................................................................................... 19

4.2.1 Price ....................................................................................................................................................... 20

4.2.2 Service ................................................................................................................................................... 20

4.2.3 Convenience .......................................................................................................................................... 20

5 Competitive Landscape and Industry Dynamics ............................................................................. 21

5.1 Market Share Analysis by Payment Channels ...................................................................................... 21

5.1.1 Credit transfer ........................................................................................................................................ 22

5.1.2 Direct debit ............................................................................................................................................. 23

5.1.3 Card payments ...................................................................................................................................... 24

5.1.4 Check payments .................................................................................................................................... 25

5.2 Debit Cards Category Share ................................................................................................................. 26

5.2.1 By bank .................................................................................................................................................. 26

5.2.2 By scheme ............................................................................................................................................. 27

5.3 Credit Cards Category Share ................................................................................................................ 28

5.3.1 By bank .................................................................................................................................................. 28

5.3.2 By scheme ............................................................................................................................................. 29

5.4 Charge Cards Category Share .............................................................................................................. 30

6 Strategies Adopted by Key Companies ............................................................................................ 31

6.1 Marketing Entry Strategies .................................................................................................................... 31

6.2 Marketing/Product Strategies ................................................................................................................ 32

6.2.1 Debit cards ............................................................................................................................................. 32

6.2.2 Prepaid cards ......................................................................................................................................... 33

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6.2.3 Credit cards ........................................................................................................................................... 34

6.3 Pricing Strategies................................................................................................................................... 36

7 Market Size and Growth Potential of the Payment Card Industry .................................................. 37

7.1 Market Share Analysis by Type of Card ................................................................................................ 37

7.2 Total Industry Size and Forecast of Card Industry ................................................................................ 38

7.2.1 Analysis by number of cards ................................................................................................................. 38

7.2.2 Analysis by transaction value ................................................................................................................ 39

7.2.3 Analysis by transaction volume ............................................................................................................. 40

7.3 Debit Card Category Size and Forecast ................................................................................................ 41




7.3.4 Other key performance indicators ......................................................................................................... 44

7.4 Prepaid Card Category Size and Forecast ............................................................................................ 46

7.4.1 Analysis by number of cards by segment .............................................................................................. 47


7.5 Charge Card Category Size and Forecast ............................................................................................ 50




7.5.4 Analysis by frequency of use ................................................................................................................. 53

7.6 Credit Card Market Size and Forecast .................................................................................................. 54


7.6.2 Analysis transaction value ..................................................................................................................... 55


7.6.4 Other key performance indicators ......................................................................................................... 57

8 Company Profiles, Products, and Marketing Strategies ................................................................. 59

8.1 UBS AG ................................................................................................................................................. 59

8.1.1 Strategies ............................................................................................................................................... 60

8.1.2 Debit cards offered ................................................................................................................................ 62

8.1.3 Credit cards offered ............................................................................................................................... 62

8.1.4 Prepaid card offered .............................................................................................................................. 63

8.2 Credit Suisse ......................................................................................................................................... 64

8.2.1 Strategies ............................................................................................................................................... 64

8.2.2 Debit cards offered ................................................................................................................................ 66

8.2.3 Credit cards offered ............................................................................................................................... 67

8.2.4 Charge cards offered ............................................................................................................................. 67

8.2.5 Prepaid cards offered ............................................................................................................................ 67

9 Appendix .............................................................................................................................................. 68

9.1 Methodology .......................................................................................................................................... 68

9.2 Contact Us ............................................................................................................................................. 68

9.3 About Timetric ........................................................................................................................................ 68

9.4 Disclaimer .............................................................................................................................................. 69

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LIST OF FIGURES

Figure 1: Current and Future Growth of Various Card Categories in Switzerland, 2008–2017 ..................................................................... 7 Figure 2: Growth Potential of Switzerland’s Cards and Payments Industry by Area of Usage ...................................................................... 8 Figure 3: Switzerland’s Cards and Payments Industry Drivers ................................................................................................................... 10 Figure 4: Number of Internet Users in Switzerland (Millions), 2008–2012 .................................................................................................. 11 Figure 5: Internet Penetration in Switzerland (%), 2008–2012 ................................................................................................................... 11 Figure 6: Number of POS terminals in Switzerland (Thousands), 2008–2017 ............................................................................................ 12 Figure 7: Number of ATMs in Switzerland (Thousands), 2008–2017.......................................................................................................... 13 Figure 8: Coop Group’s Retail Sales (CHF Millions) and Growth (%), 2007–2011 ..................................................................................... 14 Figure 9: Urban Vs Rural Population in Switzerland (Millions) 2008–2017 ................................................................................................. 15 Figure 10: Switzerland’s Card Fraud Statistics (CHF Millions), 2008–2017 ................................................................................................ 16 Figure 11: Consumer Preferences on Various Types of Cards .................................................................................................................. 19 Figure 12: Share of Different Payment Channel in Switzerland (%), 2008 And 2012 .................................................................................. 21 Figure 13: Switzerland’s Value and Growth of Credit Transfers (CHF Millions), 2008–2012 ....................................................................... 22 Figure 14: Switzerland’s Value and Growth of Direct Debit (CHF Millions), 2008–2012 ............................................................................. 23 Figure 15: Switzerland’s Value and Growth of Card Payments (CHF Millions), 2008–2012 ........................................................................ 24 Figure 16: Switzerland’s Value and Growth of Check Payments (CHF Millions), 2008–2012 ..................................................................... 25 Figure 17: Switzerland’s Debit Card Category Share by Banks (%), 2011 ................................................................................................. 26 Figure 18: Switzerland’s Debit Card Category Share by Schemes (%), 2011 ............................................................................................. 27 Figure 19: Switzerland’s Credit Card Category Share by Bank (%), 2011 .................................................................................................. 28 Figure 20: Switzerland’s Credit Card Category Share by Schemes (%), 2011 ........................................................................................... 29 Figure 21: Switzerland’s Charge Card Category Share by Schemes (%), 2011 ......................................................................................... 30 Figure 22: Snapshot of Migros Group Partners in Cumulus Bonus Points Program in Switzerland ............................................................ 32 Figure 23: Comparison of TCS MasterCard Cards in Switzerland .............................................................................................................. 34 Figure 24: Comparison of Charges on Credit Cards of UBS Bank in Switzerland ....................................................................................... 36 Figure 25: Switzerland’s Card industry by Type of Card (%), 2008–2017 ................................................................................................... 37 Figure 26: Switzerland’s Card industry Size by Volume (Thousands), 2008–2017 ..................................................................................... 38 Figure 27: Switzerland’s Card industry Size by Transaction Value (CHF Millions), 2008–2017 .................................................................. 39 Figure 28: Switzerland’s Card industry Size by Transaction Volume (Millions), 2008–2017 ....................................................................... 40 Figure 29: Switzerland’s Debit Card Category Size by Volume (Thousands), 2008–2017 .......................................................................... 41 Figure 30: Switzerland’s Debit Card Category Size by Transaction Value (CHF Millions), 2008–2017 ....................................................... 42 Figure 31: Switzerland’s Debit Card Category Size by Transaction Volume (Millions), 2008–2017 ............................................................ 43 Figure 32: Switzerland’s Debit Card Category Size by Frequency of Use, 2008–2017 ............................................................................... 44 Figure 33: Debit Card Usage ATMs and POS Terminals (Thousands), 2008–2017 ................................................................................... 45 Figure 34: Switzerland’s Prepaid Card Category Market Size by Volume (Thousands), 2008–2017 .......................................................... 46 Figure 35: Switzerland’s Open-Loop Prepaid Cards Segment Size by Volume (Thousands), 2008–2017 .................................................. 47 Figure 36: Switzerland’s Closed-Loop Prepaid Cards Segment Size (Thousands), 2008–2017 ................................................................. 48 Figure 37: Switzerland’s Prepaid Cards Category Size by Transaction Value (CHF Millions), .................................................................... 49 Figure 38: Switzerland’s Charge Card Category Size by Volume (Thousands), 2008–2017 ....................................................................... 50 Figure 39: Switzerland’s Charge Card Category Size by Transaction Value (CHF Millions), 2008–2017 .................................................... 51 Figure 40: Switzerland’s Charge Card Category Size by Transaction Volume (Millions), 2008–2017 ......................................................... 52 Figure 41: Switzerland’s Charge Card Category Size by Frequency of Use, 2008–2017 ........................................................................... 53 Figure 42: Switzerland’s Credit Card Category Size by Volume (Thousands), 2008–2017 ......................................................................... 54 Figure 43: Switzerland’s Credit Card Category Size by Transaction Value (CHF Millions), 2008–2017 ...................................................... 55 Figure 44: Switzerland’s Credit Card Category Size by Transaction Volume (Millions), 2008–2017 ........................................................... 56 Figure 45: Switzerland’s Credit Card Category Size by Frequency of Use, 2008–2017 .............................................................................. 57 Figure 46: Switzerland’s Credit Card Category Size by Average Transaction Value (CHF), 2008–2017 .................................................... 58 Figure 47: UBS AG Cards Offered by Market Segmentation ...................................................................................................................... 60 Figure 48: Credit Suisse’s Cards Offered by Market Segmentation ............................................................................................................ 64 Figure 49: Snapshot of Cards Offered by Credit Suisse ............................................................................................................................. 65

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LIST OF TABLES

Table 1: Switzerland’s Payment Channels (CHF Millions), 2008 and 2012 ................................................................................................ 21 Table 2: Switzerland’s Card industry by Type of Card (Thousands), 2008–2017........................................................................................ 37 Table 3: Switzerland’s Card industry Size by Volume (Thousands), 2008–2017 ........................................................................................ 38 Table 4: Switzerland’s Card industry Size by Transaction Value (CHF Millions), 2008–2017 ..................................................................... 39 Table 5: Switzerland’s Card industry Size by Transaction Value (US$ Millions), 2008–2017 ...................................................................... 39 Table 6: Switzerland’s Card industry Size by Transaction Volume (Millions), 2008–2017 .......................................................................... 40 Table 7: Switzerland’s Debit Card Category Size by Volume (Thousands), 2008–2017 ............................................................................. 41 Table 8: Switzerland’s Debit Card Category Size by Transaction Value (CHF Millions), 2008–2017 .......................................................... 42 Table 9: Switzerland’s Debit Card Category Size by Transaction Value (US$ Millions), 2008–2017........................................................... 42 Table 10: Switzerland’s Debit Card Category Size by Transaction Volume (Millions), 2008–2017 ............................................................. 43 Table 11: Switzerland’s Debit Card Category Size by Frequency of Use, 2008–2017 ................................................................................ 44 Table 12: Switzerland’s Prepaid Card Category Size by Volume (Thousands), 2008–2017 ....................................................................... 46 Table 13: Switzerland’s Open-Loop Prepaid Cards Segment Size by Volume (Thousands), 2008–2017 ................................................... 47 Table 14: Switzerland’s Closed-Loop Prepaid Cards Segment Size (Thousands), 2008–2017 .................................................................. 48 Table 15: Switzerland’s Prepaid Cards Category Size by Transaction Value (CHF Millions), ..................................................................... 49 Table 16: Switzerland’s Prepaid Cards Category Size by Transaction Value (US$ Millions), ..................................................................... 49 Table 17: Switzerland’s Charge Card Category Size by Volume (Thousands), 2008–2017 ........................................................................ 50 Table 18: Switzerland’s Charge Card Category Size by Transaction Value (CHF Millions), 2008–2017 ..................................................... 51 Table 19: Switzerland’s Charge Card Category Size by Transaction Value (US$ Millions), 2008–2017 ..................................................... 51 Table 20: Switzerland’s Charge Card Category Size by Transaction Volume (Millions), 2008–2017 .......................................................... 52 Table 21: Switzerland’s Charge Card Category Size by Frequency of Use, 2008–2017 ............................................................................. 53 Table 22: Switzerland’s Credit Card Category Size by Volume (Thousands), 2008–2017 .......................................................................... 54 Table 23: Switzerland’s Credit Card Category Size by Transaction Value (CHF Millions), 2008–2017 ....................................................... 55 Table 24: Switzerland’s Credit Card Category Size by Transaction Value (US$ Millions), 2008–2017 ....................................................... 55 Table 25: Switzerland’s Credit Card Category Size by Transaction Volume (Millions), 2008–2017 ............................................................ 56 Table 26: Switzerland’s Credit Card Category Size by Frequency of Use, 2008–2017 ............................................................................... 57 Table 27: Switzerland’s Credit Card Category Size by Average Transaction Value (CHF), 2008–2017 ...................................................... 58 Table 28: Switzerland’s Credit Card Category Size by Average Transaction Value (US$), 2008–2017 ...................................................... 58 Table 29: Insurance on Various Credit Cards by UBS ................................................................................................................................ 61 Table 30: UBS Travel Insurance Plus Package Benefits to Credit Cardholders ......................................................................................... 61

EXECUTIVE SUMMARY



1 Executive Summary

Switzerland’s card industry exhibited slight growth both in terms of volume and value during the review period

(2008–2012). The overall card industry in terms of volume recorded a CAGR of X.XX%, rising from XX.X

million cards in 2008 to XX.X million cards in 2012. Over the forecast period, the card industry is forecast to

grow at a CAGR of X.XX% from XX.X million cards in 2013 to XX.X million cards by the end of 2017.

The credit card category remains the key driver with highest growth rate

The credit card category posted the highest growth rate with a CAGR of X.XX% during the review period and

X.XX% over the forecast period. In terms of volume, the credit card category increased from X.X million cards

in 2008 to X.X million cards in 2012. Over the forecast period, the credit card category grew from X.X million

cards in 2013 to X.X million cards by the end of 2017.

The prepaid cards category held XX.X% of card volume in 2012. The second-largest market share was debit

cards with XX.X%, followed by credit cards with XX.X%. Over the forecast period, the volume of debit cards is

expected to increase from X.X million cards in 2013 to XX.X million cards by the end of 2017, at a CAGR of

X.XX%.

Increasing usage of web-enabled smartphones and tablets with rising internet users

Switzerland has one of the highest internet penetration rates in Europe, representing XX.X% of the total

population. The number of internet users increased at a CAGR of X.XX%, from X.X million users in 2008 to

X.X million users in 2012. XX% of internet users have smartphones and other mobile devices. In 2012, tablet

usage grew by XX% and the investments shifted from data network to mobile infrastructure.

Telecommunication providers in Switzerland are aggressively investing in the LTE (long-term evolution)/4G

network and XX% of the country is expected to have LTE coverage by the end of 2013. This network is

expected to increase the speed of the internet and therefore the speed of card transactions online and at retail

POS terminals.

Young consumers are the key client segmentation for financial cards

The younger generation is a growing target group in terms of card spending. There were X.X million people

aged between XX and XX, representing XX.X% of the total population in 2013. To appeal to the younger

audience, banks are offering debit and credit cards with special discounts and privileges. UBS is offering a

debit card “UBS Generation” which is designed especially for the young people aged from XX to XX years in

the country. The bank is also offering two types of debit cards linked to their bank accounts: the UBS Maestro

Card and the UBS customer card.

Steadily growing B2C e-commerce sector

B2C e-commerce and mobile shopping continue to increase in revenues. B2C e-commerce revenues

increased by XX.X% in 2012 compared to the growth of 2011. B2C e-commerce sale is mainly driven by

steadily growing internet users and the increasing adoption of web-enabled smartphones and tablets. In 2011,

more than XX% of the Swiss population between XX and XX used the internet on regular basis, with more

than half of them shopping online in the same year. The growing B2C e-commerce sector is drawing foreign

companies into the market. Increasing e-commerce is forecast to raise card usage online.

Credit card category led by Credit Suisse in terms of cards issued

The five major banks in the credit card category were UBS, Credit Suisse, Raiffeisen Bank, Corner Banca and

Viseca, which accounted for XX.X% of card volume in 2011. Credit Suisse, one of the leading banks, held the

largest volume of cards in circulation at XX.X%. Other banks including UBS, Corner Banca, Viseca and

Raiffeisen Bank held respective shares of XX.X%, XX.X%, XX.X% and X.X% in 2011. The remaining X.X%

was held by other companies in the card industry.

MARKET ATTRACTIVENESS AND THE FUTURE PROSPECTS OF

THE CARDS AND PAYMENTS INDUSTRY



2 Market Attractiveness and Future Prospects of the Cards and

Payments Industry

Debit and prepaid cards gained huge popularity during the review period. The debit and prepaid card

categories accounted for an aggregate market share of XX.X% in 2012. The prepaid cards category held the

highest market share of XX.X% in 2012, whereas the debit card category held a market share of XX.X%. With

increasing disposable income, rapidly developing infrastructure, the advent of new technologies and

increasing consumer awareness, the card industry is projected to grow rapidly over the forecast period.

Figure 1: Current and Future Growth of Various Card Categories in Switzerland, 2008–2017

Source: Timetric analysis © Timetric

Growth prospects for both credit and charge cards

Credit cards made up XX.X% of the overall card volume. This category recorded the highest growth rate, with

a CAGR of X.XX% during the review period and X.XX% over the forecast period. This growth represents the

increasing acceptance of credit cards and is forecast to gain the market share of both debit and prepaid cards

over the forecast period.

Credit and charge cards can be offered to prosperous customer segments such as corporate and high net

worth individuals (HNWIs); they are widespread in other emerging countries such as India and China. Banks

should introduce a range of credit and charge cards with special benefits to both corporate and prosperous

individual customers to increase the rate of issue and transaction value.

MARKET ATTRACTIVENESS AND THE FUTURE PROSPECTS OF

THE CARDS AND PAYMENTS INDUSTRY



Enhanced client segmentation to increase the card volume

The Swiss cards and payments industry is yet to be explored to its full potential by card issuers. Niche

categories such as cards targeted at HNWIs, women and teenagers, gift cards, business cards and e-

shopping cards are gaining popularity in other developed and developing countries, but are yet to be exploited

by card issuers in Switzerland.

Targeting cards towards different customer segments is an important strategy to increase the number of cards

in circulation. UBS is offering a debit card called the “UBS Maestro Card Campus” for students to address the

unique banking needs of students at colleges and universities. This card has functions both as a domestic

debit and student card under regulations of the school in the country. This student card is designed to

facilitate universities and colleges to supervise students and this card can also be used for other purposes

including borrowing books from the library and tuition fee payment.

Other sectors that hold potential for the growth of the cards and payments industry include the retail, mobile

shopping and online shopping sectors. A few niche markets like the gift cards segment, special cards for

women, rechargeable cards, and charge and credit cards for HNWIs are an unexplored market in Switzerland.

Debit and credit cards have significant potential in the retail sales, travels, online shopping and entertainment

areas. At the corporate level, credit and corporate cards are used to meet purchasing needs, as these cards

have a fixed payment timeline which can allow companies to pay the outstanding amount to their respective

bank on time and maintain strong credibility. Prepaid cards are used for retail purchases, travel booking,

online shopping, transportation and entertainment.

Figure 2: Growth Potential of Switzerland’s Cards and Payments Industry by Area of Usage


ANALYSIS OF CARDS AND PAYMENT MARKET FACTORS



2.1 Regulatory Framework

The Swiss National Bank (SNB) and Swiss Financial Market Supervisory Authority (FINMA) are the two

regulatory bodies which are responsible for the regulatory governance of financial services industry. SNB

issues the regulation for financial intermediaries. FINMA is responsible for issuing guidelines on financial

market regulation and ensures transparency in the regulatory process.

Commercial banks follow standard regulations for issuing a Switzerland credit card. Banks consider credit

history and regular source of income for issuing a credit card to an individual in the country. To acquire a

credit card, an individual should have a banking account with the bank that is issuing the credit card. As a

member of European Union (EU), cards and payments are also regulated by SEPA Cards Framework.

2.1.1 SEPA card framework

The European Banking Commissions and European Payment Council approved the SEPA Cards Framework

(SCF) in 2006 to assist banks, card issuing companies and cardholders to remove restrictions regarding

various requirements in card payment settlement, technical specifications and cross-border payments. The

framework defines principles and regulations which must be implemented by banks, schemes, and other

stakeholders to enable European customers to use general purpose cards to make payments and cash

withdrawals in euro throughout the SEPA area.

According to the SCF, payment cards issued in the European Union should be the same in the originating

country as everywhere else within the SEPA, no cards should be designed exclusively for use within a single

country and no card scheme should be designed exclusively for cross-border use within SEPA.

This framework is an EPC resolution which will enable banks, payment institutions, card schemes and all

stakeholders to move towards SEPA.

Implementation options available in the SCF

According to the situation in each European country, card issuers have a number of options to offer SCF

compliant card products. They are:

Replace a non-SCF compliant scheme with a SCF compliant scheme.

Develop one or more non-SCF compliant schemes to become SCF compliant.

Brand cards with one or more SCF compliant schemes (providing such schemes accept co-branding).

Develop its card business into its own SCF compliant three-party scheme by issuing or acquiring

directly or through license agreements.

Technical specifications and the mandate for EMV cards under SCF

The SEPA cards framework recognizes that EMV standard is the best technology platform for payment

security across Europe. The EMV program enables the implementation of CHIP and PIN security for card

transactions.

Important progress indicators of a SEPA are the volume of cards, POSs and ATMs now in the market which

require CHIP and PIN authorization. EMV-compliant cards, POS and ATMs in SEPA are closely monitored.

EMERGING CONSUMER ATTITUDES AND TRENDS



3 Emerging Consumer Attitudes and Trends

Consumer attitudes and preferences play a major role in the success of the cards and payments industry, just

as any other product in any industry. Organizations must research their target market thoroughly, considering

age group, income level and locality (urban or rural). Precautions must be undertaken when determining

consumer expectations of product pricing and expectation of service. The following section discusses factors

which help cards and payments industry to make effective business decisions.

3.1 Market Segmentation and Targeting

The industry posted a nominal growth in the volume of cards during the review period, growing at a CAGR of

X.XX% from XX.X million cards in 2008 to XX.X million cards in 2012. The usage and demand of cards varies

significantly based on the market targeted; corporate customers (including government and public bodies) will

not have the same needs as individual customers, various income groups, travelers (both business and

leisure), and consumers from different age groups. Large domestic and foreign banks are making a concerted

effort to segment the overall industry and target the most profitable and growing segments to gain a significant

share and improve revenue.

3.1.1 Retail customers

Cards for young people aged 13-24 years

Most banks are offering their card products for significant pool of young population aged between XX and XX

years. There were X.X million people falling under the age bracket of XX to XX years, representing XX.X% of

the total population in 2013. To attract this younger audience, banks are offering debit and credit cards with

special discounts and privileges.

UBS is offering a debit card called “UBS Generation”, which is designed specifically for the young people

aged XX to XX years in the country. The bank is also offering two types of debit cards which are linked to their

bank accounts: UBS Maestro Card and UBS Customer Card.

Cards targeting students

Students aged between XX and XX years are considered a significant population who use cards for both

online and offline shopping. Due to the increasing advancements in payment infrastructure, educational

institutions are now accepting card payments. To serve the unique banking needs of students, banks are

introducing various card products with special discounts and attractive features; UBS is offering a UBS

Maestro Card Campus card, linked to the student’s UBS Campus personal account. This card and account

are designed specifically for students and are offered to those studying at college, university or undertaking a

course of training.

3.1.2 Corporate sector

Banks and card services classify the corporate sector by their specific service requirements. Travel cards for

frequent travelers, commercial cards for small- and large-businesses and food cards are all being offered to

specific business units. Banks are offering special products, adopting marketing strategies and providing

specialized promotional offers based on segment type and size. The following section details the key

segments of the corporate market and how they are being targeted.

EMERGING CONSUMER ATTITUDES AND TRENDS



Travel cash cards for corporate employees and frequent fliers

Corporate employees who are at senior management levels in various organizations go abroad frequently on

business assignments. The banking needs of these busy employees are quite different compared with other

normal frequent fliers; they may need to stay abroad where currency value could vary relative to the local

currency. To serve these corporate employees, banks are offering travel cash cards which normally function

as prepaid card. It can be reloaded and can be used for the payment of goods and services at retail merchant

and through online. For example, Credit Suisse is offering travel cash card with PIN which can be used like a

prepaid card.

3.2 Consumer Preference

Customer preferences in cards and payments industry usually include price, convenience and associated

services. Service and convenience have a significant role for corporate and retail customers when deciding

which payment card to choose.

Price is the most influential factor for retail customers when selecting the most suitable payment card. In the

corporate sector, convenience and price are of high importance when a company is procuring a payroll, travel

and entertainment card, whereas service and convenience are important factors for all card types.

Figure 3: Consumer Preferences on Various Types of Cards


COMPANY PROFILE, PRODUCTS AND MARKETING STRATEGIES



4 Strategies Adopted by Key Companies

The growth of the industry has encouraged several foreign banks and card providers to enter Switzerland’s

markets. To achieve a maximum customer base within this competitive industry, domestic and foreign banks

are adopting innovative marketing and growth strategies. The following section discusses the marketing,

pricing and product strategies adopted by commercial banks and those used by foreign banks to enter the

industry.

4.1 Marketing Entry Strategies

The banking sector is open to foreign companies. Foreign banks are required to obtain a banking license from

the central bank when an appropriate organization is assured, with sufficient equity capital and staff to

conduct a banking operation. Banks with foreign shareholders are not allowed to use a name referring to

Switzerland or giving the impression the bank may be Swiss. In the case of branch establishment, foreign

banks are exempted from the mandatory equity and risk allocation requirements, and tax considerations.

Foreign banks’ representative offices are not permitted to undertake bank activities, though they can offer

services for which a banking license is not required. The increase in the banking population in the country and

the growing internet and smartphone penetration are encouraging the foreign banks’ profits in the country.

The bank entered into the Swiss market in 1997 with the acquisition of Bank Prokredit and Bank Aufina and

brought the consumer credit business together under the GE Money Bank brand.

As of December 2011, the bank had XX branches across Switzerland. It focuses on granting loans to private

customers and small to medium-sized enterprises (SME), vehicle lease financing, granting loans to affiliated

companies, receiving funds in the form of deposit accounts and fixed-term deposits and issuing cash bonds.

GE Money Bank AG issues various credit cards in association with MasterCard.




4.2 Marketing/Product Strategies

This section discusses the marketing and product strategies adopted by commercial banks and service

providers to attract new customers and retain existing ones.

4.2.1 Debit cards

Cards with reward points in association with retail companies

Debit card customers enjoy the benefit of various offers and deals provided by banks in partnership with retail

companies and e-retailers on purchase of goods and services from affiliated stores. These offers include

discounts, combo offers, cashback, free goods and services on the purchase of a product. Rebates and

discounts lead to increased customer satisfaction. GE Money Bank offers Cumulus-MasterCard in association

with Migros Group (Migros), a company in the business of retailing.

As a member of Cumulus’ reward points program, cardholders benefit from every purchase at Migros and at

the Migros partners. Cardholders can accumulate one point on each purchase of CHFX. Accumulated points

are added to the cardholder’s account for every two months and this information would be communicated

through e-mails.

Cardholders are offered special discounts at a range of Migros’ partners which are in tourism, leisure, dining,

retail, and education sectors.

Figure 4: Snapshot of Migros Group Partners in Cumulus Bonus Points Program in Switzerland

Source: Company website and Timetric analysis © Timetric




Cards targeting young population

The younger generation is a considerable and growing target group in terms of card spending. There were

X.X million people aged XX to XX years, representing XX.X% of the total Swiss population in 2013. To entice

the younger population, banks are offering debit and credit cards with special discounts and privileges.

UBS is offering a debit card “UBS Generation” which is designed especially for the young people aged XX to

XX years in the country. The bank is also offering two types of debit cards which are linked to their bank

accounts: the UBS Maestro Card and the UBS Customer Card.


Educational institutions are accepting cards for the payments of tuition fees, college fees, and library fees due

to the developments of payment infrastructure. To serve the special banking needs of students, banks are

offering debit cards tailored to their needs. UBS is offering a debit card (UBS Maestro Card Campus card)

which is linked to the UBS Campus personal account. This card can be used for the payment of goods and

services not only in Switzerland but in a growing number of countries across the globe.

4.2.2 Prepaid cards

Cards targeting frequent fliers facilitating leverage on currency exchange charges

Prepaid cards play an important role in attracting the unbanked population with reloadable function. These

cards can also be used as a debit card for cash withdrawal and the payment of goods and services. Banks

are offering prepaid cards while targeting the frequent fliers with the availability of cards in both local (CHF)

and international (US$) currencies. This function helps the frequent fliers in reducing exchange rates levied on

purchased in abroad. For example, Credit Suisse is offering travel cash card which can be used like a prepaid

card with a PIN. The card can be loaded with a specific amount in CHF or US$. The cardholder can use it to

withdraw cash at ATMs or make cash-free payments in stores, hotels or gas stations worldwide in the local

currency.




4.2.3 Credit cards

Customer loyalty programs with attractive discounts

In partnership with other companies who already have significant pool of customers, banks are offering credit

cards with loyalty programs. In 2011, GE Money Bank AG partnered with Touring Club Switzerland (TCS), a

non-profit organization with headquarters in Geneva, in the areas of passenger and vehicle assistance. In

association with TCS, the bank is offering TCS MasterCard under its loyalty program. Under this loyalty

program, cardholders are benefited with sales bonus of up to X% on card purchases.

Cardholders can receive up to 1% discount at fuel retailers British Petroleum (BP) and Tamoil when refueling

or shopping. These associations have significantly increased the number of credit cards.


Many aged between XX and XX are pursuing higher education, and are often financially dependent on

parents. The banking needs of this significant pool of students are different from the banking needs of the

general population. There were X million aged XX to XX years, representing XX.X% of the total population in

2013. Various banks are offering MasterCard and Visa credit cards along with debit cards in the country.




5 Company Profiles, Products, and Marketing Strategies

5.1 UBS AG

UBS AG (UBS) is a Switzerland-based banking corporation which provides retail, investment, corporate and

institutional banking, as well as wealth and asset management. The bank employs XX,XXX people and has

offices in more than XX countries, including all major financial centers. UBS AG is the parent company of UBS

Group and is headquartered in Zurich and Basel.

UBS operates its business through five business divisions; wealth management, retail and corporate, wealth

management Americas, investment bank, and global asset management.

Wealth management:

The wealth management division provides financial services to wealthy private clients around the world except

to those served by wealth management Americas. The division provides financial services ranging from

investment management to estate planning, corporate finance advice and specific wealth management

products.

Wealth management Americas:

The wealth management Americas division offers advice-based solutions through financial advisors who

deliver a fully integrated set of products and services specifically designed to address the needs of ultra high

net worth, high net worth, core affluent individuals and their families. This segment covers the domestic United

States business (Wealth Management US), the domestic Canadian business and the international business

booked in the United States.

Investment bank:

UBS offers corporate client solutions and investor client services through its investment bank division. Client

solutions include all advisory and solutions capabilities: origination, structuring and execution. The equity and

debt capital markets solutions deliver benefits to corporate, financial and sponsor clients. Investor client

services include execution, distribution and trading for institutional investors and to provide support to UBS’s

wealth management business. Investor client services are comprised of the bank’s equities businesses

together with FX, precious metals, rates and credit.

Global asset management:

This division offers investment capabilities and investment styles across all major traditional and alternative

asset classes to which include equity, fixed income, currency, hedge fund, real estate, infrastructure and

private equity investment capabilities. The global asset management division’s fund services unit provides

professional services including legal fund set-up, accounting and reporting for traditional investment funds and

alternative funds.

Retail and corporate:

A range of financial products and services are available to retail, corporate and institutional clients.




5.1.1 Strategies

UBS is offering a range of solutions to both private and business customers. These customers are segmented

based on various demographic factors such as age, profession and status in society. The bank’s private

customers are segmented as children, young people, students, young professionals, families, couples and

individuals. Based on the profession and status, UBS’ private customers are segmented as High Net worth

Individuals (HNWIs), executives, entrepreneurs, lawyers, notaries and fiduciary agents.

As part of its marketing strategy for its card products, the bank is offering a range of card products to these

customer segments. For corporations and institutions, UBS is offering a range of card products in while

targeting their special payment needs such as inventory purchase, international travel and trading.

The following table provides a snapshot of the UBS AG’s card offerings and the target market strategy

adopted for payment cards:

Figure 5: UBS AG Cards Offered by Market Segmentation


Cards targeting young people

For young people aged XX to XX years in the country, UBS is offering an all in one banking solution “UBS

Generation”. This solution is comprised of the UBS personal account Generation and UBS savings account

for young people. These young customers are offered free UBS Credit Card for the people aged from XX to

XX years with a minimum income of CHFX,XXX per year. The bank is also offering two types of debit cards

which are linked to their bank accounts: UBS Maestro Card and UBS customer card to the significant pool of

young population in the country.




Bonus program to encourage credit card spending

UBS is a bonus program called “UBS KeyClub”. Bank’s credit cardholders are benefited with bonus points

(one point is equal to CHFX) under UBS KeyClub program. The bank has partnered with various retail

companies in Ukraine and offering bonus points on the card purchases. These points are credited with three

UBS KeyClub points each quarter for every X,XXX francs spent using UBS Standard Credit Card.

5.1.2 Debit cards offered

UBS Maestro Card and UBS Customer Card

Features

The card can be used to pay for goods and services without cash in an increasing number of

countries around the world.

The cardholder can withdraw cash at ATMs in Switzerland and across the world.

UBS Maestro Card Generation

UBS Maestro Card Generation is designed for younger customers, aged between XX and XX years.

Features

The card can be used for the payment of goods and services domestically and a growing number of countries across the globe.

The cardholder can withdraw cash worldwide.

The cardholder is entitled for commission-free cash withdrawals at ATMs operated by third-party banks and Postomats.

The cardholder can collect points with UBS KeyClub for young people and students by regularly using the card.

5.1.3 Credit cards offered

UBS Classic/Standard Credit Card

The bank offers a range of classic and standard credit cards in association with Visa and MasterCard

companies.

Features

The cardholder is entitled for the flexible payment options.

The cardholder is offered travel and aviation accident insurance for free of charge.

The cardholder is also entitled for UBS Travel Insurance Plus (optional): comprehensive insurance

protection before and during travel (including travel cancellation).

The card is equipped with online banking services.

The cardholder can receive bonus points on his/her card purchase through the bank’s KeyClub

program.

UBS Special Edition Credit Card

Features

The cardholder can get two cards at one price (one MasterCard and Visa card).

The card is equipped with chip based technology and PIN function.

The cardholder and his/her family automatically receive free accident insurance cover for travel on

public transport.

The cardholder is also entitled for UBS Travel Insurance Plus (optional): comprehensive insurance

protection before and during travel (including travel cancellation).

The cardholder is entitled for the flexible payment options.

The cardholder is entitled for a discount of up to XX% when renting a car from the bank’s partner

Europcar without paying any deposit.




UBS Platinum Credit Card

UBS offers platinum credit card in both Visa and MasterCard versions.

Features

The card is offered with a monthly card limit of at least CHFXX,XXX.

The cardholder can earn 9 points for every CHFX,XXX spent through the bank’s key club bonus

points program.

The cardholder is entitled for UBS Travel Insurance Plus included in annual card fee (including travel

cancellation).

The cardholder is offered free priority pass, which given an access to selected airport lounges

worldwide, worth of US$XX.

The cardholder can receive up to three additional cards included in the annual fee – also available in

CHF and US$ on request.

The cardholder can avail preferential client care from the UBS Platinum Assistance Center (including

Lifestyle Service).

The card is equipped with online banking services.

UBS Gold Credit Card

Features

The card is offered with higher monthly credit limit (standard limit CHFXX,XXX).

The cardholder can receive 6 points for every CHFX,XXX spent through card.

The cardholder is entitled for travel and aviation accident insurance: higher insurance coverage in the

event of death or disability.

The cardholder is offered free priority pass worth of US$XX.

MasterCard Gold International

Features

The card is available in Swiss francs, euros and US dollars.

If the cardholder spends certain amount specified by the bank, the annual fee will be reduced or even

waived entirely.

The card is entitled for the online banking services.

The cardholder and his/her family is entitled for free accident insurance cover for travel on public

transport.

5.1.4 Prepaid card offered

UBS MasterCard Prepaid Card

Features

The card is available from the age of XX upwards, no credit check required.

The cardholder can access prepaid card data at any time and from anywhere in the world.

The cardholder can receive bonus points for purchases made.

The card is equipped with PayPass function for quick payment of small amounts.




5.2 Credit Suisse

Credit Suisse provides a range of financial solutions to companies, institutional clients and high-net-worth

private clients worldwide, as well as retail clients in Switzerland. The company operates through four business

divisions: private banking and wealth management and investment management.

Private banking and wealth management:

The bank’s private banking and wealth management division offers comprehensive advice and a broad range

of financial solutions to private, corporate and institutional clients. Its wealth management business serves

nearly two million clients, including, ultra high net worth individuals (UHNWIs) and high net worth individuals

(HNWIs) clients around the globe and private domestic clients.

The division provides advice and services to a wide range of clients, serving the needs of over XXX,XXX

corporations and institutions, including large corporate clients, small and medium size enterprises (SME),

institutional clients, financial institutions, shipping companies and commodity traders. Its asset management

business provides investment solutions and services globally to a wide range of clients, including pension

funds, governments, foundations and endowments, corporations and individuals.

Investment banking:

Investment banking segment offers a broad range of financial products and services, focusing on businesses

that are client-driven. Its portfolio products and services include global securities sales, trading and execution,

prime brokerage and capital raising and advisory services as well as comprehensive investment research. Its

clients include corporations, governments, pension funds and institutions around the world.

5.2.1 Strategies

The following table provides a snapshot of the Credit Suisse’s card offerings and their target customers:

Figure 6: Credit Suisse’s Cards Offered by Market Segmentation





Figure 7: Snapshot of Cards Offered by Credit Suisse


APPENDIX



6 Appendix

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http://www.scip.org/

mailto:[email protected]

APPENDIX



Data analysis frameworks, scorecards and models

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