Protection Programme - Lost + Fraudulent Transactions

Here is a Great news for Credit Card Holders in India. Under pressure from regulator to introduce cover on lost card, fraudulent transactions etc - Kotak Credit Cards and Citibank have introduced Card Protection Programme.

What is Card Protection Programme - CPP ?
As a credit card holder, you are protected from liabilities arising from your credit card loss / theft on transactions before and after. Additionally, it covers fraudulent transactions without you losing the card [say a -commerce site gets hacked which has stored your credit card details and they are misused]

CPP comes at a small fee of Rs 950 p.a and can get coverage of upto Rs 50,000 on fraudulent transactions and for Rs 1,250 fee th coverage goes upto Rs 100,000. It also covers upto Rs 10,00,000 for transactions done after reporting of credit card loss / theft.

Kotak Bank has introduced CPP facility for its Platinum and signature card holders for FREE.

We recommend users to sign-up for CPP facility if their bank is offering the same. This comes for FREE in the US with your credit card. However, in India banks are charging a fees and personally I feel its OK to do so in the beginning and later the fees can be reduced. Share your experiences.

Credit Card Penetration - Citywise

We have data on credit card penetration in Indian household segregated by cities. Residents of Coimbatore, Jaipur, Chennai, Delhi and Nagpur are the top 5 credit card holding households in India. Here is the complete list of Credit Card penetration (% of households)

• Coimbatore - 12.5%
• Jaipur - 12%
• Chennai - 11.7%
• Delhi - 11.6%
• Nagpur - 11%
• Mumbai - 9%
• Bangalore - 9%
• Surat - 8%
• Ahmedabad - 7.7%
• Pune - 7.6%
• Faridabad, Kolkata, Chandigrah - 7.5%
• Kanpur - 7%
• Amritsar - 5.4%
• Ludhiana - 5%
  

What can you do with this data ? This is helpful if you are a retailer / marketing person testing new water - say some promotions for credit card holders etc. This data will come in handy as you will get to know how many actually own the card and should you go for it or not.

Kotak Co-Branded Credit Cards Soon

Kotak Bank which entered the Credit Card business earlier this year is all set to achieve a customer base of 250,000 by the end of FY09. They are also planning to launch a host of co-branded credit cards. Mr. Pani, Business Head of Cards division said.

We are looking at entering into partnerships in the high end segment in the airline, retail, entertainment like movie or dining chains.

Kindly note his statement "high end segment" - this is where the delinquencies are far less and even if they are charged a small fee on the card and are generous in rewards and other kickbacks they get, consumers are likely to accept - a win-win for both consumers and the bank. [Recall HDFC Bank's strategy for maintaing high quality assets ?]

Kotak has issued Kotak Visa - Gold, Platinum and Signature Cards. The average spend by an Indian on Gold Cards is Rs 4,000 a month. While Kotak's customer average spend on Gold Card is Rs 10,000. Kotak has been extremely careful in terms of the kind and quality of customers being taken on the portfolio.

Credit card growth rate is expected to be in 20s percent this year and will slip to 10-12% next year. For the past 5 years, the industry growth rate has been a whopping 38%.

Insurance from Credit Cards

Some premium credit cards in India automatically come with various types of Insurance.For instance, HSBC Credit Cards in India cover Platinum Card holders with an insurance cover of upto Rs 1 cr if the card holder deceases in Air accident. While the same comes down to Rs10 lakh for accident by road or rail.

There are some companies offering Insurance with "death due to any cause" clause. This covers the recent events like Mumbai 26/11. The Indian Insurance Regulator - IRDA has advised all credit card companies to honour the claims if they have published the above mentioned clause in the terms & conditions.

Some credit card companies offer special personal accident insurance at a small premium and is usually upto Rs 2 lakh for classic card holders and Rs 4 lakh for Gold card holders. One of the problems with crdit card companies in India is, they change the terms and conditions too often and fail to communicate to the customer leading to disputes.