emerging opportunities in - marketresearch emerging opportunities in peru’s cards and payments...
TRANSCRIPT
www.timetric.com
Emerging Opportunities in
Peru’s Cards and Payments
Industry
Market Size, Trends and Drivers,
Strategies, Products and Competitive
Landscape
Product Code: VR0890
Published Date:
TABLE OF CONTENTS
Emerging Opportunities in Peru’s Cards and Payments Industry Page 2
© Timetric. This product is licensed and is not to be photocopied Published: December 2012
TABLE OF CONTENTS
1 Executive Summary ..................................................................................................................... 7 2 Market Attractiveness and Future Prospects of the Cards and Payments Industry ..................... 9 3 Analysis of Peruvian Cards and Payments Industry Drivers ..................................................... 12
3.1 Economic Fundamentals .............................................................................................................. 13
3.1.1 GDP growth ................................................................................................................................ 13
3.1.2 Urban employment ...................................................................................................................... 14
3.1.3 Rising per capita income .............................................................................................................. 15
3.2 Infrastructure Drivers ................................................................................................................... 16
3.2.1 Increasing number of internet users .............................................................................................. 16
3.2.2 Increasing smartphone penetration ............................................................................................... 17
3.2.3 Wireless 3G payment terminals .................................................................................................... 17
3.2.4 Growing number of ATMs ............................................................................................................. 17
3.2.5 Increasing number of POS terminals ............................................................................................. 18
3.3 Business Drivers .......................................................................................................................... 19
3.3.1 Growing retail sector .................................................................................................................... 19
3.3.2 Lower banking penetration ........................................................................................................... 19
3.3.3 E-commerce dynamism................................................................................................................ 20
3.3.4 Agent banking ............................................................................................................................. 21
3.4 Consumer Drivers ........................................................................................................................ 22
3.4.1 Private consumption .................................................................................................................... 22
3.4.2 Urban vs rural populations ............................................................................................................ 23
3.4.3 Declining poverty ......................................................................................................................... 24
3.5 Card Fraud Statistics ................................................................................................................... 25
3.5.1 By channel .................................................................................................................................. 25
3.6 Regulatory Framework ................................................................................................................. 26
3.6.1 Anti Money laundering (AML) and terrorist financing (TF) ............................................................... 27
4 Emerging Consumer Atti tudes and Trends................................................................................ 29
4.1 Market Segmentation and Targeting ............................................................................................. 29
4.1.1 Retail sector ................................................................................................................................ 29
4.1.2 Corporate sector .......................................................................................................................... 29
4.2 Consumer Preference .................................................................................................................. 30
4.2.1 Price ........................................................................................................................................... 30
4.2.2 Service........................................................................................................................................ 30
4.2.3 Convenience ............................................................................................................................... 31
4.3 Online Buying Behavior ................................................................................................................ 32
4.4 Preferred Payment Methods ......................................................................................................... 32
5 Competitive Landscape and Industry Dynamics........................................................................ 33
5.1 Analysis by Payment Channels ..................................................................................................... 33
5.1.1 Cash ........................................................................................................................................... 34
5.1.2 Credit transfers ............................................................................................................................ 35
5.1.3 Direct debits ................................................................................................................................ 36
5.1.4 Card payments ............................................................................................................................ 37
TABLE OF CONTENTS
Emerging Opportunities in Peru’s Cards and Payments Industry Page 3
© Timetric. This product is licensed and is not to be photocopied Published: December 2012
5.1.5 Checks........................................................................................................................................ 38
5.2 Debit Cards Category Share......................................................................................................... 39
5.2.1 By bank....................................................................................................................................... 39
5.2.2 By scheme .................................................................................................................................. 40
5.3 Credit Cards Category Share........................................................................................................ 41
5.3.1 By bank....................................................................................................................................... 41
5.3.2 By scheme .................................................................................................................................. 42
6 Strategies Adopted by Key Operators ....................................................................................... 43
6.1 Marketing Entry Strategies ........................................................................................................... 43
6.1.1 Case studies ............................................................................................................................... 43
6.2 Marketing and Product Strategies ................................................................................................. 45
6.2.1 Credit cards ................................................................................................................................. 45
7 Market Size and Growth Potential of the Payment Card Industry .............................................. 46
7.1 Share Analysis by Type of Card.................................................................................................... 46
7.2 Total Market Size and Forecast of the Card Industry ...................................................................... 47
7.2.1 Analysis by transaction value........................................................................................................ 48
7.2.2 Analysis by transaction volume ..................................................................................................... 49
7.3 Debit Card Category Size and Forecast ........................................................................................ 50
7.3.1 Analysis by number of cards ......................................................................................................... 50
7.3.2 Analysis by transaction value........................................................................................................ 51
7.3.3 Analysis by transaction volume ..................................................................................................... 52
7.3.4 Other key performance indicators ................................................................................................. 53
7.4 Prepaid Card Category Size and Forecast ..................................................................................... 55
7.4.1 Analysis by number of cards by segment....................................................................................... 56
7.4.2 Analysis by transaction value........................................................................................................ 58
7.5 Credit Card Category Size and Forecast ....................................................................................... 59
7.5.1 Analysis by number of cards ......................................................................................................... 59
7.5.2 Analysis by transaction value........................................................................................................ 60
7.5.3 Analysis by transaction volume ..................................................................................................... 61
7.5.4 Other key performance indicators ................................................................................................. 62
8 Company Profiles, Product, and Marketing Strategies .............................................................. 64
8.1 Banco de Crédito del Perú (BCP).................................................................................................. 64
8.1.1 Strategies .................................................................................................................................... 64
8.1.2 Credit cards offered ..................................................................................................................... 65
8.2 Banco Financiero......................................................................................................................... 67
8.2.1 Strategies .................................................................................................................................... 67
8.2.2 Debit card offered ........................................................................................................................ 67
8.2.3 Credit cards offered ..................................................................................................................... 67
8.3 HSBC Bank Peru ......................................................................................................................... 68
8.3.1 Strategies .................................................................................................................................... 68
8.3.2 Credit cards offered ..................................................................................................................... 69
9 Appendix ................................................................................................................................... 71
9.1 Methodology................................................................................................................................ 71
TABLE OF CONTENTS
Emerging Opportunities in Peru’s Cards and Payments Industry Page 4
© Timetric. This product is licensed and is not to be photocopied Published: December 2012
9.2 Contact Us .................................................................................................................................. 71
9.3 About Timetric ............................................................................................................................. 71
9.4 Disclaimer ................................................................................................................................... 72
TABLE OF CONTENTS
Emerging Opportunities in Peru’s Cards and Payments Industry Page 5
© Timetric. This product is licensed and is not to be photocopied Published: December 2012
LIST OF FIGURES
Figure 1: Current and Future Prospects of Various Cards in Peru ................................................................................................................. 9 Figure 2: Grow th Potential of Peru’s Cards and Payments Industry by Area of Use .................................................................................... 10 Figure 3: Peruvian Cards and Payments Industry Drivers ........................................................................................................................... 12 Figure 4: Peruvian GDP Grow th Rate (%), 2008–2017................................................................................................................................ 13 Figure 5: Urban Employment Grow th in Peru (%), 2007–2011 .................................................................................................................... 14 Figure 6: Per Capita Income in Peru (PEN), 2008–2017 ............................................................................................................................. 15 Figure 7: Internet Users in Peru (Million), 2008–2012.................................................................................................................................. 16 Figure 8: Number of ATMs in Peru (Thousands), 2008–2017...................................................................................................................... 17 Figure 9: Number of POS Terminals in Peru (Thousands), 2008–2017 ....................................................................................................... 18 Figure 10: Internet Users Who Buy Online in Peru (%), 2011 ...................................................................................................................... 20 Figure 11: Average Number of Hours Spent Online per Month by Internet Users in Peru, 2011.................................................................. 20 Figure 12: Peruvian Private Consumption Grow th (%), 2007–2011 ............................................................................................................. 22 Figure 13: Urban vs Rural Populations in Peru (Million), 2008–2012 ........................................................................................................... 23 Figure 14: Peruvian Total Poverty Growth (%), 2007–2011 ......................................................................................................................... 24 Figure 15: Peruvian Card Fraud Statistics (PEN Million), 2008–2012 .......................................................................................................... 25 Figure 16: Objectives of the National Plan to Combat Money Laundering and Terrorist Financing.............................................................. 27 Figure 17: Consumer Preferences on Various Types of Cards .................................................................................................................... 30 Figure 18: Share of Payment Options in Peru (%), 2012 ............................................................................................................................. 32 Figure 19: Shares of Payment Channels in Peru (%), 2008 And 2012......................................................................................................... 33 Figure 20: Value and Growth of Peruvian Cash Transfers (PEN Million), 2008–2012 ................................................................................. 34 Figure 20: Value and Growth of Peruvian Credit Transfers (PEN Million), 2008–2012 ................................................................................ 35 Figure 21: Value and Growth of Peruvian Direct Debit (PEN Million), 2008–2012 ....................................................................................... 36 Figure 22: Value and Growth of Peruvian Card Payments (PEN Million), 2008–2012 ................................................................................. 37 Figure 23: Value and Growth of Peruvian Check Payments (PEN Million), 2008–2012............................................................................... 38 Figure 24: Peruvian Debit Card Category Shares by Banks (%), 2011 ........................................................................................................ 39 Figure 25: Peruvian Debit Card Category Shares by Scheme (%), 2011..................................................................................................... 40 Figure 26: Peruvian Credit Card Market Shares by Bank (%), 2011 ............................................................................................................ 41 Figure 27: Peruvian Credit Card Market Shares by Scheme (%), 2011 ....................................................................................................... 42 Figure 28: Foreign Banks and Entry Strategies in Peru ............................................................................................................................... 44 Figure 29: Peruvian Card Shares by Category (%), 2008–2017 .................................................................................................................. 46 Figure 30: Peruvian Cards Industry Volume (Thousands), 2008–2017........................................................................................................ 47 Figure 31: Peru’s Cards Industry Transaction Value (PEN Million), 2008–2017 .......................................................................................... 48 Figure 32: Peruvian Cards Industry Transaction Volume (Million), 2008–2017............................................................................................ 49 Figure 33: Peruvian Debit Card Category Size (Thousands), 2008–2017.................................................................................................... 50 Figure 34: Peruvian Debit Card Category Size (PEN Million), 2008–2017................................................................................................... 51 Figure 35: Peruvian Debit Card Category Size by Transaction Volume (Million), 2008–2017...................................................................... 52 Figure 36: Peruvian Debit Card Category Size by Frequency of Use, 2008–2017....................................................................................... 53 Figure 37: Peruvian Debit Card Use at ATMs and POS Terminals (Million), 2008–2017 ............................................................................. 54 Figure 38: Peruvian Prepaid Cards Category Size (Thousands), 2008–2017.............................................................................................. 55 Figure 39: Peruvian Open-Loop Prepaid Cards Segment (Thousands), 2008–2017 ................................................................................... 56 Figure 40: Peruvian Closed-Loop Prepaid Cards Segment Size (Thousands), 2008–2017 ......................................................................... 57 Figure 41: Peruvian Prepaid Cards Category Size (PEN Million), 2008–2017 ............................................................................................. 58 Figure 42: Peruvian Credit Card Category Size by Volume (Thousands), 2008–2017................................................................................. 59 Figure 43: Peruvian Credit Card Category Size by Transaction Value (PEN Million), 2008–2017 ............................................................... 60 Figure 44: Peruvian Credit Card Category Size by Transaction Volume (Million), 2008–2017..................................................................... 61 Figure 45: Peruvian Credit Card Category Size by Frequency of Use, 2008–2017...................................................................................... 62 Figure 46: Peruvian Credit Card Category Size by Average Transaction Value (PEN), 2008–2017 ............................................................ 63 Figure 47: Banco de Crédito del Perú – Segmentation of Cards Offered..................................................................................................... 64 Figure 48: Banco Financiero – Market Segmentation of Cards Offered ....................................................................................................... 67 Figure 49: HSBC Bank – Segmentation of Cards Offered ........................................................................................................................... 68 Figure 50: Snapshot of HSBC Bank’s Miles/Points Rew ard Program .......................................................................................................... 69
TABLE OF CONTENTS
Emerging Opportunities in Peru’s Cards and Payments Industry Page 6
© Timetric. This product is licensed and is not to be photocopied Published: December 2012
LIST OF TABLES
Table 1: Peruvian Payment Channels (PEN Million), 2008 and 2012 .......................................................................................................... 33 Table 2: Peruvian Card Volumes by Category (Thousands), 2008–2017 .................................................................................................... 46 Table 3: Peruvian Cards Industry Volume (Thousands), 2008–2017 ........................................................................................................... 47 Table 4: Peruvian Cards Industry Transaction Value (PEN Million), 2008–2017 ......................................................................................... 48 Table 5: Peruvian Cards Industry Transaction Value (US$ Million), 2008–2017 .......................................................................................... 48 Table 6: Peruvian Cards Industry Transaction Volume (Million), 2008–2017............................................................................................... 49 Table 7: Peruvian Debit Card Category Size (Thousands), 2008–2017....................................................................................................... 50 Table 8: Peruvian Debit Card Category Size (PEN Million), 2008–2017 ...................................................................................................... 51 Table 9: Peruvian Debit Card Category Size (US$ Million), 2008–2017 ...................................................................................................... 51 Table 10: Peruvian Debit Card Category Size by Transaction Volume (Million), 2008–2017 ....................................................................... 52 Table 11: Peruvian Debit Card Category Size by Frequency of Use, 2008–2017 ........................................................................................ 53 Table 12: Peruvian Prepaid Cards Category Size (Thousands), 2008–2017 ............................................................................................... 55 Table 13: Peruvian Open-Loop Prepaid Cards Segment Size (Thousands), 2008–2017 ............................................................................ 56 Table 14: Peruvian Closed-Loop Prepaid Cards Segment Size (Thousands), 2008–2017 .......................................................................... 57 Table 15: Peruvian Prepaid Cards Category Size (PEN Million), 2008–2017 .............................................................................................. 58 Table 16: Peruvian Prepaid Cards Category Size (US$ Million), 2008–2017............................................................................................... 58 Table 17: Peruvian Credit Card Category Size by Volume (Thousands), 2008–2017.................................................................................. 59 Table 18: Peruvian Credit Card Category Size by Transaction Value (PEN Million), 2008–2017 ................................................................ 60 Table 19: Peruvian Credit Card Category Size by Transaction Value (US$ Million), 2008–2017................................................................. 60 Table 20: Peruvian Credit Card Category Size by Transaction Volume (Million), 2008–2017...................................................................... 61 Table 21: Peruvian Credit Card Category Size by Frequency of Use, 2008–2017....................................................................................... 62 Table 22: Peruvian Credit Card Category Size by Average Transaction Value (PEN), 2008–2017 ............................................................. 63 Table 23: Peruvian Credit Card Category Size by Average Transaction Value (US$), 2008–2017.............................................................. 63
EXECUTIVE SUMMARY
Emerging Opportunities in Peru’s Cards and Payments Industry Page 7
© Timetric. This product is licensed and is not to be photocopied Published: December 2012
1 Executive Summary
Stable economy
The Peruvian economy has shown a significant upward trend over the last ten years (2002–2012) which has
been mainly reflected in sustained annual growth in gross domestic product (GDP). In 2012, Peru’s GDP
expanded X.X% in the third quarter, after expansions of X.X% in the second quarter and X.X% in first, mainly
driven by domestic demand which grew by nearly XX% in the third quarter of 2012. Peru’s banking system
has shown tremendous growth with the steadily growing economy. However, despite its sound economy, the
country still has relatively low banking penetration of XX% in comparison with other countries in Latin
America, such as Brazil with XX%, and Chile with XX%. This gives financial institutions opportunities to
introduce financial products and services to capture this unbanked population.
Prepaid cards gaining acceptance by middle -class users
During the review period (2008–2012), both the debit and credit card categories registered slight declines,
with respective CAGRs of –X.XX% and –X.XX%, due to the impact of the global recession in 2009. The
number of debit cards fell from XX.X million in 2008 to XX.X million in 2012, whereas the number of c redit
cards fell from X.X million to X.X million during the same period. Prepaid cards registered the highest growth
during the review period with a CAGR of XX.XX%, rising from X.X million cards in 2008 to X.X million in 2012.
The prepaid cards category is mainly driven by the country’s unbanked population , and payment service
providers are already benefiting from the country’s low banking penetration by offering prepaid cards. For
instance, NovoPayment, a prepaid card service provider in Latin America, launched the Latodo MasterCard to
offer unbanked Peruvians access to modern payment and service infrastructure. This card can be reloaded at
more than X,XXX stores throughout the country. The prepaid cards category is expected to post the highest
growth with a CAGR of XX.XX% during the forecast period (2013–2017), from XX.X million cards in 2013 to
XX.X million in 2017.
Regulatory framework for agent banking
In 2005, regulations were int roduced which allow banks to offer financial services through third-party agents.
According to resolution No 775-2008, any licensed financial institution may use third parties to deliver services
on its behalf, subject to the superintendent of banks, insurance and pension funds’ (SBS) prior authorization.
The regulation does not impose any constraints on the type of agents financial institutions may choose.
Agents are typically small retail establishments through which banks are able to execute financial transactions
such as loan payments, withdrawals, transfers, deposits to a customer’s or a third party’s account, payments
on goods or services, and other functions permitted by SBS. Agent banking has become a significant and
cost-effective way for banks to diversify geographically. Banks are also offering services in Peru through mini
branches within retail establishments that are part of their own group. For instance, domestic bank Interbank
has mini branches inside Supermercados Vivanda, a supermarket chain in the county’s capital Lima. Mini
branches are used to acquire new credit card customers in the country. Through agent banking and mini
branches, banks can reach a large number of retail customers, increasing the number of cards in circulation.
Strategies by key operators
Peru’s banking industry is growing with a rapidly expanding middle class in the country, and domestic demand
is accelerating the growth of the retail, banking and service industries. The steadily growing economy has
encouraged leading global banks to expand into the country, and with the help of a favorable regulatory
framework, the banking and financial services industry has expanded in line with the inflows of foreign direct
investments (FDI), the and growing middle-class population, which tends to have higher salaries and requires
greater access to credit facilities such as loans, credit cards and mortgages. To compete in Peru’s banking
industry, both foreign and domestic banks are adopting strategies such as introduc ing co-branded cards
designed to benefit cardholders on daily purchases in the form of deals , discounts, reward miles or points
programs.
MARKET ATTRACTIVENESS AND FUTURE PROSPECTS OF
CARDS AND PAYMENTS INDUSTRY
Emerging Opportunities in Peru’s Cards and Payments Industry Page 8
© Timetric. This product is licensed and is not to be photocopied Published: December 2012
2 Market Attractiveness and Future Prospects of the Cards and
Payments Industry
Peru’s cards industry recorded a nominal growth at a CAGR of X.XX% during the review period in terms of
volume. In terms of transaction value, the industry increased from PENXX.X billion (US$XX.X billion) in 2008
to PENXXX.X billion (US$XX.X billion) in 2012. Economic growth is anticipated to benefit the industry and
provide positive growth potential for banking and non-banking card issuers in the country.
The debit and credit card categories in Peru recorded slight declines, with CAGRs of –X.XX% and –X.XX%
respectively during the review period. Over the forecast period, the debit card category is expected to post a
CAGR of X.XX%, although the overall cards industry in value terms is expected to record a CAGR of
XX.XX%. In terms of value, the credit cards category is forecast to post a CAGR of X.XX% over the forecast
period.
Figure 1: Current and Future Prospects of Various Cards in Peru
Source: Timetric analysis © Timetric
Demand for smart cards with enhanced security features
In the financial sector worldwide, card products such as debit, credit, prepaid and charge cards with chips and
EMV technology are gaining importance to reduce card fraud. With growing internet penetration and
smartphone use in Peru, using a card for commercial transactions has become common. In Peru, the most
highly reported type of fraud is strip falsification, also known as skimming or cloning, which involves copying
the credit card's magnetic strip without the user's knowledge.
Card fraud grew at a CAGR of X.XX% during the review period, from PENX.X million (US$X.X million) in 2008
to PENX.X million (US$X.X million) in 2012. Most financial institutions across the globe have implemented
technology such as EMV and contactless to increase transactional security , and Peruvian banks are in the
process of moving towards these technologies. However, very few banks offer cards with EMV technology in
Peru. Scotiabank in Peru introduced premium chip-enabled credit card products in 2011, such as the Master
Card Gold debit card. Peru’s cards industry has significant potential for cards with enhanced security features,
due to increasing card fraud in the country.
ANALYSIS OF CARDS AND PAYMENTS MARKET DRIVERS
Emerging Opportunities in Peru’s Cards and Payments Industry Page 9
© Timetric. This product is licensed and is not to be photocopied Published: December 2012
3 Analysis of Peruvian Cards and Payments Industry Drivers
Peru’s banking system has shown tremendous growth with the country’s steadily growing economy. However,
the country still has relatively low banking penetration, giving financial institutions opportunities to introduce
services and card products to capture the unbanked population.
Figure 2: Peruvian Cards and Payments Industry Drivers
Source: Timetric analysis © Timetric
ANALYSIS OF CARDS AND PAYMENTS MARKET DRIVERS
Emerging Opportunities in Peru’s Cards and Payments Industry Page 10
© Timetric. This product is licensed and is not to be photocopied Published: December 2012
3.1 Card Fraud Statistics
Credit card fraud is a major issue in Peru, and grew at a CAGR of X.XX% during the review period from
PENX.X million (US$X.X million) in 2008 to PENX.X million (US$X.X million) in 2012. POS transactions were
the main channel for fraudulent activity.
3.1.1 By channel
ATMs and POSs are the most used platforms for payment cards, other than online shopping, and the Central
Bank of Peru and commercial banks in the country have taken a number of steps, such as increasing security
measures, to control fraudulent activity. For example, Scotiabank in Peru started issuing premium chip-
enabled credit card products in 2011, including the Master Card Gold debit card.
POS transactions recorded the highest amount of fraudulent activities. Due to the lack of complete adoption of
EMV as well as the advanced technologies such as contactless and near field communication, card fraud in
the country is increasing significantly. Commercial banks are slowly adopting EMV technology for their card
products, and payment service providers are also implementing security measures to reduce card fraud in
Peru. For example, in November 2012, Ingenico announced the deployment of the new iWL250 3G terminal in
Peru with VisaNet in order to provide secure payment solutions and value-added services to cardholders and
commercial establishments. Moves such as this are expected to reduce card fraud over the forecast period.
ANALYSIS OF CARDS AND PAYMENTS MARKET DRIVERS
Emerging Opportunities in Peru’s Cards and Payments Industry Page 11
© Timetric. This product is licensed and is not to be photocopied Published: December 2012
3.2 Regulatory Framework
Peru’s banking system is highly prosperous due to the rapid expansion of financial services in the country.
Branchless banking (through third parties) has grown significantly in Peru since regulation in 2005 which
allowed banks to offer financial services through third -party agents. SBS is the main government agency
responsible for the regulation and supervision of the financial, insurance and private pension system, and the
prevention and detection of money laundering and terrorist financing.
Consumer protection
Peru currently does not have a law setting maximum interest rates for consumer credit, and there are no plans
by SBS to impose limits on credit card interest rates or fees. SBS is responsible for consumer protection , and
is equipped with a team of supervisors dedicated to ensuring compliance with consumer-focused regulations.
SBS mainly focuses on transparency and the complete disclosure of quantitative and qualitative information,
rather than on dictating pricing or setting pricing limits. All financial institutions are required to report prices
and other basic information on a quarterly basis to their customers, and during financial contracts, customers
must be clearly informed of these by the provider before a transaction is concluded or a contract is signed.
Although financial institutions are free to set fees, charges and interest rates, SBS has legal authority to
actively identify and curb or prohibit predatory or abusive practices, and to impose sanctions on financial
institutions.
Retail agents
In 2005, SBS announced a regulation which allowed banks to offer financial services through third-party
agents. According to resolution No 775-2008, any licensed financial institution may use third parties to deliver
services on its behalf, subject to SBS’s prior authorization. The regulation does not impose any constr aints on
the type of agents financial institutions may choose. Typically, agents are retail establishments such as
pharmacy stores and supermarkets. Through these agents, banks can access a large number of customers
who purchase goods and services at these stores, and offer products such as credit, prepaid and charge
cards.
Agents are permitted to conduct the following transactions:
Loan payments
Withdrawals
Transfers
Deposits to a customer’s or a third party’s account
Payments for goods or services
Other functions permitted by SBS
EMERGING CONSUMER ATTITUDES AND TRENDS
Emerging Opportunities in Peru’s Cards and Payments Industry Page 12
© Timetric. This product is licensed and is not to be photocopied Published: December 2012
4 Emerging Consumer Attitudes and Trends
Consumer attitude and preference plays a major role in the success of any product in any industry , and this is
also the case with Peru’s cards and payments industry. Organizations need to be aware of their target
markets, their age groups, income levels and locality. Consumer expectation in terms of service and product
pricing should be assessed. The following section discusses the factors that can help organizations in Peru’s
cards and payments industry to take effective business decisions.
4.1 Market Segmentation and Targeting
The use of and demand for payment cards vary significantly based on the market targeted, such as corporate
customers and individual customers. Large domestic and foreign banks are making concentrated efforts to
divide the overall market and target profitable and growing sectors in order to gain market share and improve
their overall business.
4.1.1 Retail sector
Co-branded cards are generally credit cards that are offered by a financial services company in partnership
with a retail merchant. These cards allow banks to access the retailers’ customer base in order to increase the
number of cards in circulation. Co-branded cards are designed to encourage the number of transactions both
in value and volume with a variety of incentives such as discounts or rebates. For instance, Banco de Crédito
de Perú (BCP) offers three co-branded cards, the Lanpass Visa Classic, Gold and Platinum credit cards, for
frequent fliers in co-operation with Chile’s LAN Airlines. The cardholders can earn kilometers by flying LAN
routes under its frequent flyer program, which can be redeemed for travel.
4.1.2 Corporate sector
Banks and card service provides are classify corporate customers by their need type and specific service
requirements. Travel cards for frequent travelers, commercial cards for small and large business , and food
cards are offered for business users, with banks developing products and adopting marketing strategies for
each market based on its type and size. The following section details key business markets and how they are
targeted.
Cards for corporate customers
Both banking and non-banking card issuers offer a wide range of cards and services to corporate customers,
including business managers and employees that allow them to t rack and evaluate their expenditure in areas
such as travel expenditure, utility payments, office supplies, and salaries and other employee benefits. BCP
offers Visa Business and Corporate cards for company executives and employees. They can pay for
expenses such as travel, meals or gasoline, and the cards give detailed information of the expenses in the
form of both consolidated and individual statements to cardholders.
STRATEGIES ADOPTED BY KEY PLAYERS
Emerging Opportunities in Peru’s Cards and Payments Industry Page 13
© Timetric. This product is licensed and is not to be photocopied Published: December 2012
5 Competitive Landscape and Industry Dynamics
The Peruvian banking system recorded impressive growth during the review period, supported by a booming
economy that has fuelled greater consumer demand. This trend is expected to continue over the forecast
period as banks look to increase the low degree o f participation in the financial system. Strong growth exists
for consumer loans, mortgages, as well as small and micro business credit. Most banks in Peru performed
well during the review period. For example, BBVA Banco Continental increased its branch n etwork by XX.X%
to XXX branches in 2011. The Peruvian banking industry is attracting international operators with its promising
future growth. For instance, in November 2012, Chinese commercial bank ICBC, which provides a wide range
of financial products and services, established a branch in Lima under the name ICBC (Peru) Company Ltd.
This growing market is expected to see more number of foreign bank entries over the forecast period.
5.1 Analysis by Payment Channels
In Peru, the cash transactions channel dominates other channels such as credit transfers, direct debit, card
payments and check payments, with a XX.X% share in 2012. During the review period, the cards payments
channel’s share recorded a growth of X.X percentage points in 2012 over 2008 in terms of market share. The
following section contains the market shares of various payment channels and details how these channels
have grown during the review period. The channels covered are checks, cards, credit transfers, and direct
debit.
STRATEGIES ADOPTED BY KEY PLAYERS
Emerging Opportunities in Peru’s Cards and Payments Industry Page 14
© Timetric. This product is licensed and is not to be photocopied Published: December 2012
6 Strategies Adopted by Key Operators
Peru’s banking industry is growing with a rapidly expanding middle class in the country, and domestic demand
is accelerating the growth of the retail, banking and service industries. The following section discusses the
marketing strategies adopted by commercial banks operating in the country, the strategies adopted by foreign
banks entering Peru’s banking industry, and the pricing and operational strategies undertaken.
6.1 Marketing Entry Strategies
This section analyzes the entry strategies of foreign banks, as they are the leading card providers. Steady
economic growth has encouraged leading global banks to expand their business in the country , and with the
help of a favorable regulatory framework, the banking and financial services industry has expanded in line
with the huge flows of foreign direct investment (FDI), and growth in the country’s middle class, which
generally has higher salaries and requires greater access to credit facilities such as loans, credit cards and
mortgages. There are around XX financial institutions in Peru, of which approximately XX are commercial
banks. The most common mode of entry adopted by foreign banks is through opening branches, whereby
foreign financial institutions initially establish a branch in Peru, which is later converted into a standalone
business once operations are stabilized. Examples of the market entry strategies adopted by foreign banks in
Peru are as follows:
6.1.1 Case studies
Citibank
Citibank del Perú SA, a Peru-based institution principally engaged in corporate and personal banking,
established a branch in 1920. In 2004, the branch was incorporated as Citibank del Peru SA, a subsidiary of
Citibank NA. Currently, the bank serves more than XXX large corporations, XXX small and medium
enterprises and serves approximately XXX,XXX customers in the country. The bank operates XX branches
and employs more than XXX people in the country.
Deutsche Bank
Deutsche Ueberseeische Bank, a subsidiary of Deutsche Bank , followed the same mode of entry as Citibank.
It opened a branch in Lima under the name Banco Aleman Transatlantico in 1905, and expanded with a
branch in Callao in 1906. In 1976, Deutsche Ueberseeische Bank was incorporated into Deutsche Bank . It
received a banking license and launched its subsidiary, Deutsche Bank (Perú) SA, in Lima.
Industrial and Commercial Bank of China Ltd
In November 2012, ICBC, which provides financial products and services to X.XX million corporate clients and
XXX million individual customers worldwide through XX,XXX outlets in and outside China, entered the
Peruvian financial industry by establishing a branch in Lima under the name ICBC (Peru) Company Ltd.
Scotiabank
Scotiabank, a financial services provider in Canada, entered Peru’s banking sector as a shareholder of Banco
Sudamericano, with a XX% stake in 1997. In 2006, the bank increased its holding to XXX% and became the
only shareholder. In the same year, as part of its expansion strategy in Latin America, Scotiabank acquired a
majority stake, approximately XX%, of the shares owned by Banca Intesa SpA in Banco Wiese Sudameris. In
the same year, the bank started its operations under the name Scotiabank Peru SAA, integrating both Banco
Wiese Sudameris and Banco Sudamericano. The bank currently operates nearly XXX branches and provides
a range of retail, commercial, corporate, treasury and investment services.
MARKET SIZE AND GROWTH POTENTIAL OF PAYMENT CARD
INDUSTRY
Emerging Opportunities in Peru’s Cards and Payments Industry Page 15
© Timetric. This product is licensed and is not to be photocopied Published: December 2012
7 Market Size and Growth Potential of the Payment Card Industry
This section gives an overview of the market size and growth potential of various segments of Peru’s cards
and payments industry. The various subsections cover market sha re of various types of cards, current and
forecasted market size of various card categories. It analyses credit, debit and prepaid card categories market
size in terms of transaction volume, value and number of cards. The section covers both the past performance
and future growth potential of various types of Peru’s cards and payments industry.
7.1 Share Analysis by Type of Card
In terms of cards volume, debit cards held the highest share of XX.X% in 2012. The second-largest share was
held by prepaid cards with XX.X%, followed by credit cards with XX.X%. Over the forecast period, debit cards
registered a CAGR of XX.XX%, rising from XX.X million cards in 2013 to XX.X million in 2017.
MARKET SIZE AND GROWTH POTENTIAL OF PAYMENT CARD
INDUSTRY
Emerging Opportunities in Peru’s Cards and Payments Industry Page 16
© Timetric. This product is licensed and is not to be photocopied Published: December 2012
7.2 Debit Card Category Size and Forecast
The debit card category registered a decline with a CAGR of –X.XX% in terms of volume during the review
period, from XX.X million in 2008 to XX.X million in 2012. In terms of transactions value, the debit card
category posted a CAGR of XX.XX% during the review period, growing from PENXX.X billion (US$XX.X
billion) in 2008 to PENXXX.X billion (US$XX.X billion) in 2012.
7.2.1 Analysis by number of cards
The debit card category recorded a CAGR of –X.XX% during the review period, with the number of cards in
operation declining from XX.X million in 2008 to XX.X million in 2012. Over the forecast period, the number of
cards in issue is expected to increase from XX.X million in 2013 to X.X million in 2017 at a CAGR of X.XX%.
7.3 Prepaid Card Category Size and Forecast
Number of total prepaid cards
In terms of number of cards, the prepaid card category registered significant growth at a CAGR of XX.XX%
during the review period, from X.X million in 2008 to X.X million in 2012. The category is forecast to grow at a
CAGR of XX.XX% over the forecast period, from X.X million in 2013 to X.X million in 2017.
7.4 Credit Card Category Size and Forecast
During the review period, the credit cards category declined at a CAGR of -X.XX% in terms of volume. In
terms of transaction value, however, it registered significant growth with a CAGR of XX.XX%. The number of
cards in issue fell from X.X million in 2008 to X.X million in 2012.
7.4.1 Analysis by number of cards
During the review period, the total number of outstanding credit cards fell slightly from X.X million in 2008 to
X.X million in 2012, at a CAGR of -X.XX%. Over the forecast period, the category is expected to record a
CAGR of X.XX%, growing from X.X million in 2013 to X.X million in 2017, gaining some of the debit card
category’s share.
COMPANY PROFILE, PRODUCTS AND MARKETING STRATEGIES
Emerging Opportunities in Peru’s Cards and Payments Industry Page 17
© Timetric. This product is licensed and is not to be photocopied Published: December 2012
8 Company Profiles, Product, and Marketing Strategies
8.1 Banco de Crédito del Perú (BCP)
Banco de Crédito del Perú (BCP) is a Peru-based financial services company engaged in providing various
products and services to individuals, businesses and institutions. Credicorp Ltd, a Peru-based financial
institution which provides commercial and investment banking services and securities brokerage, is a parent
company of BCP, holding a XX.X% stake. The bank offers a range of products and services such as saving
accounts, commercial and consumer loans, mortgages, debit and credit cards, financial i ntermediation,
port folio management, insurance policies and other banking operations. As of December 2011, the bank
operated XXX branches in Peru.
8.1.1 Strategies
The following table provides a snapshot of BCP’s card offerings and the strategy adopted for credi t cards:
Figure 3: Banco de Crédito del Perú – Segmentation of Cards Offered
Source: Company website and Timetric analysis © Timetric
Cards target frequent fliers with travel miles program s
BCP offers various credit cards which are mainly targeted to frequent fliers in Peru in co-operation with airline
services companies. The bank offers three credit cards, the Visa Classic, Gold and Platinum cards, for
frequent fliers in cooperation with Chile’s LAN Airlines. Cardholders can earn kilometers by flying LAN routes
under its frequent flyer program. The bank also provides value-added services such as travel accident
insurance and fraud cover to stimulate number of credit cards in circulation and their usage.
Co-branded cards with attractive offers and discounts
In co-operation with various retailers in Peru, BCP offers various co-branded cards with discounts and offers
by the participant retailers. Co-branded credit cards include the Visa Classic Primax and the Visa Plaza San
Miguel, which are designed in association with Plaza San Miguel, a retail shopping mall in Lima, and Peruvian
fuel retailer Primax. With the Visa Plaza San Miguel credit card, cardholder benefit from discounts at all the
retail establishments in Plaza San Miguel.
COMPANY PROFILE, PRODUCTS AND MARKETING STRATEGIES
Emerging Opportunities in Peru’s Cards and Payments Industry Page 18
© Timetric. This product is licensed and is not to be photocopied Published: December 2012
8.2 Banco Financiero
Banco Financiero was established as Financial and Construction SA in 1964. In 1982, it changed its name to
Finanpro Financial Company, and in 1986 it became a commercial bank with its current name, Banco
Financiero. The bank offers a range of products and services to individuals and businesses in Peru, including
savings and deposits, credit and debit cards, loans, funding and leasing services.
8.2.1 Strategies
The following table provides a snapshot of Banco Financiero’s card offerings and its strategy adopted for debit
and credit cards:
Figure 4: Banco Financiero – Market Segmentation of Cards Offered
Source: Company website and Timetric analysis © Timetric
8.2.2 Debit card offered
MasterCard debit card
Features
Discounts and offers at partnered outlets such as supermarkets, restaurants and department stores
Can be used for internet shopping
8.2.3 Credit cards offered
Platinum, Gold and Classic credit card
Features
Up to four additional cards
Utility bills such as telephone, electricity and water can be paid with the card with no extra charges
COMPANY PROFILE, PRODUCTS AND MARKETING STRATEGIES
Emerging Opportunities in Peru’s Cards and Payments Industry Page 19
© Timetric. This product is licensed and is not to be photocopied Published: December 2012
8.3 HSBC Bank Peru
HSBC Bank Peru started operations in 2006. It currently operates four administrative offices and XX branches
nationwide, and holds a X.X% market share in Peru. The bank operates primarily through two business areas:
retail banking, and business or corporate banking. Under retail banking, HSBC Bank offers a range of
services to individual customers such as accounts, deposits, loans, credit cards and insurance services. The
bank’s business banking services include leasing, business accounts, funding, cash management and foreign
trade services to businesses in Peru.
8.3.1 Strategies
The following table provides a snapshot of HSBC Bank Peru’s card offerings , and the market strategy adopted
for credit cards:
Figure 5: HSBC Bank – Segmentation of Cards Offered
Source: Company website and Timetric analysis © Timetric
APPENDIX
Emerging Opportunities in Peru’s Cards and Payments Industry Page 20
© Timetric. This product is licensed and is not to be photocopied Published: December 2012
9 Appendix
9.1 Methodology
Timetric’s dedicated research and analysis teams consist of experienced professionals with an industry
background in marketing, market research, consulting and advanced statistical expertise.
Timetric adheres to the Codes of Practice of the Market Research Society (www.mrs.org.uk) and the Society
of Competitive Intelligence Professionals (www.scip.org).
All Timetric databases are continuously updated and revised.
9.2 Contact Us
If you have any queries about this report, or would like any further information, please contact
9.3 About Timetric
Timetric is an independent economic and business research firm that provides critical intelligence on
emerging economies and key global industries. The company offers detailed economic and sector
intelligence, business insights and independent and authoritative commentary.
Underpinning all Timetric’s research services is a belief that data – i f gained following the right technologies
and analytic frameworks – can provide unique and powerful economic and business insights.
The Timetric economic and industry intelligence centers are premium decision tools that provide access to
comprehensive research, data and expert analysis. They provide invaluable decision support, presented in an
easily digestible format and grounded in rich, proprietary data and data analysis frameworks.
Each year, Timetric produces hundreds of high-quality research reports across countries, industries and
companies. These reports draw on in-depth primary and secondary research, proprietary data and high-
quality modeling and analysis to give its readers a deep insight into global market dynamics and economic
trends.
Timetric helps its clients to:
Gain an unbiased, expert insight from a genuinely independent and trusted source
Save time in researching, visualizing and comparing economic and industry data
Access the latest and most useful data sets, indices and forecasts
Gain access to a unique methodology for understanding economic trends
Forecast and predict trends more accurately
APPENDIX
Emerging Opportunities in Peru’s Cards and Payments Industry Page 21
© Timetric. This product is licensed and is not to be photocopied Published: December 2012
Economic Research Services
Timetric’s economic research services are founded on three key goals:
1. To provide the strongest base data:
The most accurate data
The most timely and frequently updated data sets
The best data curation methodologies and standardizations
Unique data sets and forward-looking indicators
Industry-specific, premium data sets
2. To develop the best data analysis frameworks:
Unique economic indices and data analysis frameworks
Forward-looking indicators
Proprietary indices and surveys
Data analysis frameworks, scorecards and models
3. To provide authoritative independent economic insights:
To give a uniquely local perspective on developing markets
Truly expert, independent economic analysis and commentary
Proprietary analysis techniques and frameworks
Unique forecasts
Timetric believes that world-class content delivery should be the enabling factor across all it does. All its
research services follow the principle that data and research should be easy to access, visualize and
consume.
All economic research products are built on the Timetric economic research software plat form, which has four
layers:
1. Unique, proprietary aggregation and curation software for pulling together the world’s
data
2. A cloud time-series database filled with top-quality statistics from across the globe
3. Web-delivered search, discovery and research software to allow customized data
searches
4. World-class browser-based display to visualize the data searched
9.4 Disclaimer
All rights reserved.
No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any
means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the
publisher, Timetric.
The facts of this report are believed to be correct at the time of publication but cannot be guaranteed. Please
note that the findings, conclusions and recommendations that Timetric delivers will be based on information
gathered in good faith from both primary and secondary sources, the accuracy of which Timetric is not a lways
in a position to guarantee. Timetric will accept no liability whatsoever for actions taken based on any
information that may subsequently prove to be incorrect