Customer Satisfaction Study of American Express Cardmembers (Final Draft)

7/29/2019 Customer Satisfaction Study of American Express Cardmembers (Final Draft)

1/89

THESIS ON

A STUDY OF CUSTOMER SATISFACTION STUDY OF

AMERICAN EXPRESS CREDIT CARD USERS

Submitted in partial fulfillment for the award of post Graduate in

Management

AREASOF SPECIALIZATION : MARKETING & H.R

SUBMITTEDTO:

INSTITUTE OF MARKETING & MANAGEMENTQUTAB INSTITUTIONAL AREA

NEW DELHI-110016

SUBMITTED BY:

UTKARSH SINGH SISODIA

ROLL NO: 011-I-134

COURSE: PGDM

SESSION: 2011-13


2/89

UNDERTAKING:

I, Utkarsh Singh Sisodia, certify that the project report entitled

Customer satisfaction study of American Express is an original

one and has not been submitted earlier either to IMM, New Delhi or

to any other institution for the fulfillment of the requirement of a

course of post Graduate Diploma in Management (PGDM)

Place: New Delhi Utkarsh Singh Sisodia

Date: Roll No. 011-I-134


3/89

ACKNOWLEDGEMENT

Through this acknowledgement I express my sincere gratitude towards all those

people

Who helped me in this project, which has been a learning experience.

I am thankful to my project guide Dr. Robert KR. Das Pattanayakfor guiding

me

Throughout this study without his help this thesis would have not be completed.

It is my sincere endeavor to express my gratitude towards all those who directly

or indirectly contributed to this project Work.


4/89

SYNOPSIS

The credit card industry in India has registered an encouraging growth in recent

times, but the usage pattern of credit cards remains a point of concern, those in

the industry say. There has been a seven-fold increase, with the number of

cardholders touching over 38 lakh. These figures point towards the fact that the

credit card industry in India is growing at a brisk annual rate of 30 per cent and

is expected to grow at a similar rate in the coming years.

While issuing the cards may seem to be easy, the challenge for the banks lies in

being able to manage their portfolios by keeping the delinquency levels at the

lowest and customer satisfaction levels at the highest. Customer satisfaction is

the key to success. You want customers to be happy with the products and

services you provide. If they feel they have received good value for their

money, your business will prosper. Getting your customers to tell you whats

good about your business, and where you need improvement, helps you to besure that your business measures up to their expectations.

Apart from attracting potential card users, customer retention is also one of the

most important factor influencing a card issuers success. American Express

entered the Indian Market earlier than most other players present today. AmEx

has been able to generate a large base of cardmembers till date. With the influx

of new financial institutions in the card market, people have started using cards

on a more regular basis. The level of services provided by these organisations is

increasing day by day. AmEx needs to keep pace with, if not score over these

companies on service levels being provided to the customers. In order to ensure

that the existing customers stay loyal, AmEx has to ascertain whether its

existing customers are satisfied with its current service offerings.


5/89

This research has tried to study the satisfaction levels of a sample of 100

American Express cardmembers. These respondents each hold AmEx cards,

which may be of different kinds. These could be any one of the 8 different cards

offered by American Express.


6/89

CONTENT OF THESIS :

1. Title Page

2. Outline-Approved by the Executive President (Original)

3. Undertaking

4. Acknowledgements

5. Contents

6. Synopsis

7. Introduction

8. Methodology

9. Main analysis/report

10. Observations & Findings

11. Conclusions & Recommendations

12. Limitations of the Study

13. Annexure

14. Bibliography


7/89

INTRODUCTION

The credit card industry in India has registered an encouraging growth in recenttimes, but the usage pattern of credit cards remains a point of concern, those in

the industry say. Seven years back, India had a base of around five lakh credit

cards. There has been a seven-fold increase, with the number of cardholders

touching over 38 lakh. These figures point towards the fact that the credit card

industry in India is growing at a brisk annual rate of 30 per cent or similar in

coming up Years and American Express Company is a diversified worldwide

travel, financial and network services company founded in 1850. It is a world

leader in charge cards and credit cards, Travelers Cheques, travel, financial

planning, business services, insurance and international banking.

Customer satisfaction is the key to success. Getting your customers to tell you

what's good about your products or services, and where you need improvement,

helps you to ensure that your business measures up to their expectations. No

matter what type of business you're in, surveys are a valuable tool that help you

collect the information you need to understand, evaluate, and enhance customer

satisfaction.

Customer satisfaction surveys help to:

1. Improve customer, client, or employee loyalty.

2. React quickly to changes in the market.

3. Identify and capitalize on opportunities.

4. Beat the competition.

5. Retain or gain market share.

6. Increase revenue.

7. Reduce costs.


8/89

It takes a lot less money to increase your retention of current customers than to

find new ones-but I know I don't give it as much effort as I should because it

does take a lot of energy and effort! Customers like to interact with people who

do more than process and handle transactions. They often require access to

technical information and expect good interpersonal and communication skills.

To accomplish these objectives, companies need to share missions, visions and

goals. They need to monitor changing customer expectations and modify the

delivery of service and product quality to match these expectations on an

ongoing basis.

Indian Credit Card Scenario

The credit card industry in India has registered an encouraging growth in recent

times, but the usage pattern of credit cards remains a point of concern, those in

the industry say. Seven years back, India had a base of around five lakh credit

cards. There has been a seven-fold increase, with the number of cardholders

touching over 38 lakh. These figures point towards the fact that the credit card

industry in India is growing at a brisk annual rate of 30 per cent and is expected

to grow at a similar rate in the coming years. This fortifies the view that

conservative purchasing ideas are giving way to the big in-thing. But it is the

usability that raises doubts.


9/89

According to a survey by the Credit Card & Management Consultancy

(CCMC), 71 per cent of first time credit card applicants in the country have

expressed the need for advice on appropriate card selection despite the plethora

of cards available in the market. Through this survey it has come to realise a

long felt need of potential and existing cardholders for advice on suitable

selection of a credit cards. The whole idea behind the introduction of the credit

cards was to increase the purchasing capacity of the cardholder. With this in

mind, the foreign banks launched a credit card blitzkrieg on the Indian

customer.

The innovations have already begun to show their effect. The Standard

Chartered Bank has seen its credit card base shoot up after the launch of its

Global Rupee Card in March last year.

It has seen the fresh issuance of global card increase by more than one lakh, and

the bank now has a base of more than half a billion. But the real challenge for

the banks is to make the holder spend more on the card. Going by estimates,

India has a long way to be anywhere near the matured markets. The markets

like the United States and England have an average annual card spend of 1,300

and 3,600 dollars respectively.

The credit card players will have to think about simplifying the foreign

exchange transactions. When one uses the card, it is entirely his responsibility tomake sure that exchange controls have been complied with. The banks that

issue the cards, have made it abundantly clear that one has to look out for

himself. It is upto him to find out the facts of regulatory life. The real point of

worry is the spending on the credit cards. According to estimates, the average

card spending in India is even less than that in Indonesia. Those in the credit

card business say that per capita credit card spending in India is about five

hundred dollars (Rs 21,500), whereas in Indonesia, it is about 678 dollars (Rs


10/89

29,154). At present there are over a dozen players in the credit card market in

India, and the fact is the foreign banks are clearly the leaders. The leaders will

surely be identified by the innovations for the card users.

But the alarm has been raised for the banks by the figures that show that while

the average usage in Malaysia is 27 times annually, in India it is only 11 times.

Some of the key factors impacting the cards business in India are limited credit,

wide geographical spread, limited telecommunication infrastructure and

emerging regulatory controls. The other players feel that the card acceptance

base in India has to be widened. Suggestions include credit card usage at petrol

pumps and railway bookings.

They also point out that though the cards business has been in the country for

long, but even today the insurance premium cannot be paid by card. Though

LIC is talking about the introduction of this facility to customers, but its turning

into reality may take time. There is talk of widening the card business with new

features, but the present scenario does not paint a positive picture, with many

loopholes remaining to be plugged.

Of the twenty million tax payers in India, more than ten per cent of them are

cardholders. Those in the industry point out that this figure is not bad,

considering the fact that, the cards business is still in its initial stages. However,the players feel that the business has not reached an optimum level to say that

they are making money. Even the largest player in the Indian market does not

still have the economies to make the card business really profitable in India,

despite the fact that it has more than one million credit card holders. Less than

two per cent of private consumption spending in India is done on cards.


11/89

While issuing the cards may seem to be easy, the challenge for the banks lies in

being able to manage their portfolios by keeping the delinquency levels at the

lowest. Huge investments in systems and infrastructure are, therefore, a

necessity. The increase is being attributed to new ideas such as round-the-clock

functioning of card issuing banks and pulling out all stops even at a loss, to grab

a sizeable share of the expanding pie. Not to be left behind in this race, even the

big brother, the State Bank of India in association with GE Capital entered the

card business.

The spurt in the card business has gathered momentum during the past couple of

years. For instance, the HongKong & Shanghai Banking Corporation (HSBC),

was in the credit cards business since seven years, but from 50,000 card holders

in 1997, it has about three lakh card holders now.

Indias fastest growing credit card company - SBI Cards 2.5 lakh credit cards

25 cities16 months. The joint venture between Indias largest bank State

Bank of India and one of the worlds leading financial services companies GE

Capital, SBI Cards & Payment Services (SBI Cards) has issued 2.5 lakh credit

cards across 25 cities (the largest distribution network in the payment card

industry) within 16 months. Thereby achieving the target in the fastest period

seen in Indias payment card industry.

SBI Cards & Payments Services attributed this success to SBIs enormous

brand equity, and unparalleled retail branch network coupled with GE Capitals

payment card process and technology expertise. He also highlighted Speed,

Simplicity and Service as the key drivers of growth for the SBI Card. Speed

Unique and exclusive 14-day average turnaround time, coupled with availability

of the SBI Card in 25 cities in just 16 months. Simplicity Simple application

process with minimum documentation. Service 24 hours a day/7 days a week


12/89

local call access to the SBI Card Helpline across 25 cities. As a result of the

focus on the Speed, Simplicity and Service growth platform, SBI Cards today

offers the largest distribution and widest cash advance network for Indias

middle class customers. SBI Cardholders can access cash for emergency

purposes from over 158 SBI branches across 68 locations in India.

INTERMEDIARIES:

In their attempt to increase their market share, credit card companies are opting

for Direct Sales Agents. These DSAs are paid a flat rate against the approved

applications. They are also provided with bonuses either in cash or in kind at

regular interval or if they cross a certain minimum limit. The DSA team

comprises aggressive salesmen who visit different organisations and

professionals. They collect filled forms and produce them to the bank for

approval. After cards are issued they also deliver the same to the individuals.

PROMOTION

The changing trends in the payment systems are global and even in India

revolve around the change in customer needs and the evolution of financial

markets. Traditionally Indians like to pay in cash or at the most avail the

services of a bank. As a result credit card companies had to educate the

consumers and spread awareness of the uses of its products. The companies

have tried to address this issue through promotional campaigns:

Placing of take away firms of credit card at more than a thousand merchant

establishments.

Appointing of DSAs

Using business magazines and news papers for advertisement.


13/89

Mailing of forms along with contests to professionals and middle

management executives etc.

Tapping the get member route

Reducing their minimum eligibility criteria and changing income

documentation structure.

Introduction of photocards.

Tying up with durable consumer goods manufacturer ( e.g. Onida, Philips )

to sell their products.

Providing ATM facility to their card holders

Travel assistance via telebanking.


14/89

Methodology

The objectives of this project are:

a) To ascertain whether the existing customers (cardmembers) of American

Express are satisfied with the service offering as regards the Cards

Operations division.

b) To identify the areas of improvement and formulating recommendations for

the service offerings of the Cards Operations Division of American Express

Bank.

c) At the corporate level, the objective of this project is to ascertain whether the

service offerings of American Express Cards Operations Division are upto

the mark and to provide a means for delivering better value to its customers.

d) At the academic level, the objective of this project is to give insights to the

students on how to ascertain the level of satisfaction of a service

organisation.

Getting your customers to tell you what's good about your products or services,

and where you need improvement, helps you to ensure that your business

measures up to their expectations. No matter what type of business you're in,


15/89

surveys are valuable tools that help you collect the information you need in

order to understand, evaluate, and enhance customer satisfaction.

Research methodology

RESEARCH DESIGN

A good design is often characterized by objectives like flexible, appropriate,

efficient, economical and so on. Generally the design that minimizes biases and

maximizes reliability of the data collected & analysed is concerned a good

design. The design that gives the smallest experimental error is supposed to be

the best design in many investigations.

This research intends to highlight various aspects related to service offerings of

American Express Cards Operations Division. The factors like customer

perception, their attitude towards service offerings of AmEx and their card

preferences have been analysed to judge the satisfaction levels of American

Express cardmembers.

DATA COLLECTION METHOD:

Data collection for this research was done primarily through filling up of

questionnaires. A sample of 100 American Express customers were chosen forthis research. The data for this study was collected in a manner that is qualified

for the following general qualities of data:

Validity: It measures what it is supposed to measure.

Reliability: Repeating the same methods produced the same results.

Pace: Data was collected quickly enough and at an affordable cost.


16/89

In this research, the major emphasis was on unraveling the cardmembers

perception about the services associated with AmEx, in order to know their

level of satisfaction. Special emphasis was laid on collecting extremely relevant

specific data, in order to meet the objectives effectively. The data collection

needs that can be classified more or less under the following categories:

Facts: These include measurement of anything that actually exists or has

existed. The types of facts covered for this study were behavioral that covered

the data related to the AmEx cardmembers perception about the services and

other benefits associated with AmEx.

Opinion: It covered the most important data that was critical in understanding

the behavior of AmEx cardmembers towards the service offerings of AmEx and

the Cardmembers expectations from AmEx.

SECONDARY DATA

The research required a lot of information about the Credit Card market, status

of Credit Card mechanisms in India, trends in the market and about the

competition. The sources of obtaining this secondary data were the Internet and

the AmEx manual

PRIMARY DATAPrimary data for this research was collected by way of the questionnaire

method. Herein, structured questionnaires were distributed to AmEx

cardmembers.

The sample for this research consisted of 100 existing customers of AmEx that

included Executives and Professionals.


17/89

The sampling technique used was the Non-Probability sampling. This is so

because the data about the 100 existing customers of AmEx was obtained from

the companys database.

The primary data that was collected, consisted of the customer perception

regarding AmEx cards and their levels of satisfaction.

LIMITATIONS OF THE PROJECT

There are two basic limitations of this project. They are:

This research is restricted only to the National Capital Region.

In this research, emphasis is on theoretical interpretations. Only a generic

analysis of data has been done. No quantitative techniques have been used.


18/89

9.Main analysis/report

Comparative Position of Foreign Banks in India for FY 2000 (Rs mn)

HSBC CITI STAN ABN BNPDEU

BBOA ANZGAMEX

Income 12476 18778 11965 7302 2622 6609 8715 14630 4450

Net Profit 1215 2513 1853 1188 215 511 1528 1801 277

Net Worth 8373 9915 7170 5760 1973 5432 6867 11323 2579

Deposits 87547 102032 50060 34229 10601 21673 25117 84777 14183

Advances 43023 66201 43188 38964 6751 17621 36574 42334 8919

Investments 49185 42300 31400 27171 1057720992 13013 48862 12266

Spread (%) 3.1 4.7 4.8 3.9 2.7 4.8 3.6 3.8 3.6

NPAs / Net

worth (%)5.3 7 12.2 2 0.3 17.2 10 0.1 14.9

RONW (%) 14.51 25.35 25.84 20.63 10.90 9.41 22.25 15.91 10.74CAR (%) 10.3 10.5 9.5 10.1 9.5 10.4 12.9 10.9 10.1

CHARGE CARDS

Charge cards are similar to Credit cards, except that on the due date for

payment, you have to pay the whole outstanding amount. You can't part settle

the amount and pay the rest later.

COMPARISON

Select Card Issuers Brand Card Type

Acceptance


19/89

American Express Gold Amex

International

American Express Green Amex

International

Bank of India India card Master DomesticBank of India Taj Premium Master

Canara Bank Can card Master

Domestic

Canara Bank Can card Visa

Domestic

Citibank NA Diners Club Diners

Domestic

Union bank of India India card Master

Domestic

COMPARISON OF CREDIT CARDS

Card Issuers Brand Card Type Acceptance

American Express Gold Amex

International

American Express Green Amex

International

ANZ Grindlays Bank Gold Master Domestic

ANZ Grindlays Bank Gold Visa Domestic

ANZ Grindlays Bank Silver Master

Domestic

ANZ Grindlays Bank Silver Visa

DomesticBank Of India Gold Navy Visa Domestic

Bank Of India Standard Navy Visa Domestic

Bank Of India Visa Gold Visa Domestic

Bennett Coleman Times Master Domestic

Bank Of Baroda Bharat Premium Visa Domestic

Bank Of Baroda Own BOB Domestic

Bank Of Baroda Exclusive Master Domestic

Bank Of Baroda Global Visa

InternationalBank Of Baroda Gold Visa Domestic


20/89

Citibank NA Gold/Preferred Master

International

Citibank NA Gold/Preferred Visa

International

Citibank NA Indian Oil Master DomesticCitibank NA Silver/Classic Master

International

Citibank NA Silver/Classic Visa

International

Citibank NA Women Visa Domestic

Citibank NA WWF Visa

Domestic

HSBC Classic Master Domestic

HSBC Classic MasterInternational

HSBC Classic Visa Domestic

HSBC Classic Visa

International

HSBC Gold Master Domestic

HSBC Gold Master

International

HSBC Gold Visa Domestic

HSBC Gold Visa

International

ICICI Solid Gold Visa

International

ICICI Sterling Silver Visa Domestic

ICICI True Blue Visa Domestic

SBI Classic Visa Domestic

Standard Chartered Classic Master

International

Standard Chartered Classic Visa

InternationalStandard Chartered Cricket Visa

International

Standard Chartered Executive Master

International

Standard Chartered Executive Visa

International

Standard Chartered Gold Visa

International


21/89

With the credit card truly becoming an international citizen, issuers have begun

highlighting the value-added features offered along with the basic product.

While some of them are offering attractive interest rates, others are luring

customers by their reward schemes. With a plethora of choices on offer it is not

easy to come to a decision on any particular card.

Comparison in service offering:

1. First, there's the credit limit. All banks have different limits set for customers

depending upon the type of card in their possession. Even within a particular

type of card, limits may vary depending upon the credit worthiness of the

individual. This depends, among other things, on the gross income of the

individual and the period for which he/she is using the card. However, some

banks like Citibank and American Express have cards that have no set credit

limit. Amex has a charge card, which has no upper limit and allows one to

spend as much as one likes (provided the holder repays the amount at one

go).

2. Second criteria could be the lost card liability. If one is travelling and has

lost his/her credit card then reporting the loss will not be much of a problem.

HSBC, Citibank, Stanchart and Amex can be reached from any corner of theworld for information on one's card as well as for reporting the loss. Others

will mail a replacement card to the holder's mailing address whereas Amex

will replace the card within 48 hours free of cost. Liability for a lost card is

nil for Citibank, HSBC, Amex (once the bank is informed about the loss)

and the Stanchart photo card. However, the non-photo card carries a liability

of Rs 1,000.


22/89

3. Nowadays, almost all cards come with various goodies attached. These

include airline ticket booking and insurance benefits on lost luggage and

accidental deaths. HSBC, for example, offers discounts of 3.5% on domestic

airfares and 6.5% on international ones if tickets are charged to their cards.

The latest in line of value added features are the rewards programs. Here a

cardholder earns a certain number of points by spending a particular sum of

money. Stanchart, for example uses a conversion of Rs. 125 (spent in India)

or Rs. 80 (spent abroad) for one point. HSBC, on the other hand, only allows

points collected to be squared against a discount on the annual fees. A

minimum of 350 points is needed to get a discount on the annual fee.

Citibank awards one point on spending Rs100.

The table below gives an indication of the various value-added services on offer

from various banks.

Value Added Features Citibank Stanchart HSBC AmexHotel discounts - - - Yes

Travel fare discounts Yes Yes Yes Yes

Free global calling card Yes (G) - Yes Yes

Lost baggage insurance Yes Yes Yes -

Accident insurance Yes Yes Yes -

Insurance on goods purchased Yes Yes Yes -

Waiver of payment in case of accidental death - - Yes* -

Household insurance Yes (G) - - -(G) - Gold card / * Rs20, 000 for Classic and Rs40,000 for Gold


23/89

Deciding on the right Credit card

1. How much is the joining fee and the annual fee?

Generally, a card with a higher annual fee enjoys more benefits like higher

credit limit, higher accident insurance cover, accessibility to airport lounges,

travel discounts etc. OF at least the used to be the case. With cutthroat

competition between the card issuing banks, players are ready to waive joining

fees and also one-year membership fees for anyone. Grab these offers, or

negotiate this for yourself.

2. How much is the Add-on card fee?

If you are interested in buying add-on cards for your children, spouse or friend,

ask for the add-on card fee. Remember that you will be settling the bills on the

add-on card that you so touchingly gift to someone dear to you - the statement

will come to you, and the responsibility for payment is yours (as far as the credit

card company is concerned)

3. What is the interest rate?

This is actually a question that you should be asking fairly soon in the

discussion.

Remember, while the up front one off fees are bread and butter for the creditcard Company, this is the jam! If you're the sort who forgets to pay on time, or

likes to live it up and live off credit, the interest rate would be of paramount

importance. Most credit card companies charge anywhere between 2% to 3 %

per month. (Read a whopping 35% to 43% per year). That's where they make

their gravy, and that's where you pay! It is always advisable to pay off the entire

amount on due date, or, if you have a large bank balance, look for card

companies that provide the transfer balance facility. The balance transfer rate is


24/89

lower for a certain period (say six months) and then the normal rates apply. But

again this is a temporary solution to a chronic problem.

4. What is the reach?

Not an important question - most outlets in India accept both the Master card

and the Visa card, and most credit card companies provide Visa or Master

cards. So its fairly simple, and doesnt need much head scratching - they're all

more or less the same. One thing you could do is to check out for the

Automated Teller Machines nearest to your house or work place (ATMs -

almost all credit card companies now provide you the facility of withdrawing

cash from machines - I guess for things that cards just cant buy. These machines

are called ATMs, and are helpfully scattered all over the city/country/world).

Having more ATM outlets in Thailand wouldnt be of any relevance to a person

who rarely travels abroad, though it may certainly be a goal to work towards

after buying the card. Please also remember that Amex credit cards are not part

of the Visa/ Master chain, and have a separate chain of outlets where its

accepted.

5. Is it a Global card?

Now this could be useful to you if you are an overseas traveler. A Global card

can be used for paying expenses in foreign currency just like you use a credit

card to pay in rupees. Nowadays, a Global card is being issued at the same costas for a similar domestic one. It is better to have a global card, especially if

there is no premium attached.

6. How useful are branded or affinity cards?

A partnership between a card issuer and the non-profit, social or lifestyle

association is what results in an affinity card. This is for providing financial

rewards to the group or association. E.g. Citibank Womens card, Citibank


25/89

WWF cards. Citibank WWF Visa card donates a percentage of the transaction

value made through the card to the WWF fund for its environmental

conservation activities. A subscription to such cards helps ease the conscience

though it provides no monetary value.

A partnership between a bank card issuer and a commercial partner result in a

co-branded card. This entitles the cardholder to lots of freebies, prizes,

discounts on co-branded products. Logic: If a customer is loyal to one brand, he

will want to purchase the other. So if you were loyal to a particular brand, it

would make sense going for those co-branded cards. e.g. Citibank and IOC,

Bank of India and Taj group of hotels etc.

7. Whats the lost card liability?

Most Card issuers mention in the brochures that lost card liability is Rs 1000.

Be careful, that is actually AFTER it is reported to the Bank. The liability is

actually unlimited before reporting (in cases like this, you would actually thank

the credit limit because though the liability is unlimited, the ceiling should

logically be your credit limit, and the outlets accepting your stolen card should

actually check that you (or the person who stole your card) havent exceeded

your credit limit). Avoid banks that make you liable for card misuse for a single

minute after reporting it.

8. Are there any freebies?

Citibank gives a Ponds gift hamper free on subscription to its Citibank Women

card. Personal accident insurance for Air, Road or Otherwise is packaged along

with the subscription. Also Baggage cover, Purchase Protection cover and credit

shield is bundled free of cost along with the card. If you feel one these

parameters are important, then settle for the one that gives a higher cover.


26/89

9. Is immediate cash withdrawal possible?

Check out if the Bank has any ATMs near your house or workplace. This surely

helps in times of emergency. The cost component for a cash withdrawal could

be classified as follows: Service fee (transaction fee) each time you pull out

money, and Interest rate for the period for which you have used the money -

until settlement date. If you are going to withdraw cash frequently, better watch

out for this cost.

10. How long is the free credit period?

The days of credit one gets depends on the statement date and the date of

transaction. On an average, you could assume you'd get around 20 days of free

credit. However, if you buy just after the statement date, you could end up

getting upto 50 days of credit. Look for cards that give you the highest free

credit period!

11. Is a Helpline available?

A 24-hour Helpline service from the Card Company helps the cardholders

during the non-banking hours. Reporting of theft, checking of available credit

limit and other enquiries can be made by the cardholder round-the-clock. In the

end, like everything else in life, the card you want is really up to you - what

matters the most to you - credit, reach, the freebees, international reach or a

combination of parameters. Use our card category on the left bar to simply listout the names of the cards, or choose by bank name and see the cards they offer.

Or look for cards offering the lowest interest rate. Of the lowest charges on cash

withdrawal (believe me, it gets to be a serious consideration as one goes along).

Go to our shortlist card section, and search for cards based on any criteria that

you want. Happy hunting and stay careful - you may like to use our section on

how to use the card carefully to minimize the chance of its misuse by someone

else.


27/89

DEBIT CARDS

Debit card is an ATM card on the move. Today more than 60 million people

have debit cards that carry the logos of the two major payment card companies.

That number is expected to grow dramatically as debit cards become

increasingly popular. Many debit cardholdersconfuse debit cards with standard

ATMcards. Not all debit cards are equal. Debit cards with the logo of one of the

two major payment card companies are ATM cards with clout. They can be

used to obtain cash from ATM machines, and also to make purchases anywherethe logos on these cards are accepted -- over 16 million merchants worldwide.

Debit Card gives you the freedom to access your Savings or Current Account at

merchant locations and ATMs. Whenever you make payments, the amount will

be instantly debited to your account. All your purchases and cash withdrawals

will be in the currency of the country you are in, while your account will be

debited in rupees. So you needn't carry travelers Cheques or foreign exchange

the next time you travel.

There aren't many Debit cards in India as of now. The HDFC International

Debit Card comes at an annual fee of around Rs. 250/-. This charge is waived

off on one additional card taken on your account. There are charges involved on

cash withdrawals and balance queries. Normally the cash withdrawal charges

are around Rs 55/- and a meager charge of Rs.10/- for balance. If you already

have a savings or current account with the debit card issuer, you might just have

to file an application form. The company then couriers the card across to you in

around a weeks time. If you dont have an account, you will have to open an

account first and request for the debit card to be issued to your residence. The

Debit card does have a daily limit, which could be somewhere around Rs.


28/89

15,000 at ATMs, and Rs. 10,000 at merchant locations. This again is subject to

the balance available in your account.


29/89

SIGNIFICANCE OF THE PROJECT

American Express Bank has been facing stiff competition from new entrants.

They are all vying for a large share in the fast growing Indian card market. TheIndian card market has been growing at the rate of 30% per annum. AmEx

needs to keep pace with, if not score over these companies on service levels

being provided to the customers. Research has revealed that consumers today

are more discerning than ever before about what they want from their credit

cards. What they are looking for in a card issuer is - real value, genuine savings

and exceptionally good service levels.

Apart from attracting potential card users, customer retention is also one of the

most important factor influencing a card issuers success. In order to prevent itscardmembers to shift to the services of other Issuers, AmEx wants to ensure that

their service establishment is better than that of the other players in the Indian

market. Therefore, AmEx wants to find out the satisfaction levels of its

customers. Obtaining the accurate data on the satisfaction levels of its

cardmembers, will ensure AmEx to make appropriate changes in its service

offerings if necessary and in turn will help AmEx in increasing the amount of

customer loyalty. In order to ensure that the existing customers stay loyal,

AmEx has to ascertain whether its existing customers are satisfied with its

current service offerings.

American Express wants to ascertain whether its services are upto the mark and

wants to provide a means for delivering better value to its customers. This

project will help AmEx in understanding the satisfaction levels of its existing

customers.


30/89

American Express Bank

(Established 1921)

MISSION STATEMENT

Provide the best as defined by the customer.

At the lowest cost for value delivered.

With the fastest time to market for new products and services.

American Express Company is a diversified worldwide travel, financial and

network services company founded in 1850. It is a world leader in charge cards

and credit cards, Travelers Cheques, travel, financial planning, business

services, insurance and international banking.


31/89

Position as on 31.03.2000 Amount in Crores

Deposits 1418.34

Advances 891.94Net Profit 27.70

Branches

Total RuralSemi

UrbanUrban Metro

4 nil Nil nil 4

StaffTotal Officers Clerical Others Women SC/ST

895 591 252 52 N.A. N.A.

Financial Parameters 1999-2000

CRARNet NPAs/

Net Advances

Interest Income / W.

FundsNon-Int. Income

/W. FundsTier I Tier

II

Total

9.91

%

0.18

%

10.09

%

4.32% 10.96% 5.14%

Operating

Profit/W.

Funds

Return

on Assets

Business Per

employee

Profit Per employee

2.70% 1.02% 290.24 lacs 3.17 lacs

Branches in India

Calcutta

PO Box 2311, 21 Hemath Basu Sarani (Old Court House St), Calcutta 700 001,

West Bengal; Tel: +91 33 2430233; Fax: +91 33 2488896; Tlx: (953) 217574

Chennai


32/89

187 Mount Rd, Chennai 600 006, Tamil Nadu; Tel: +91 44 8524313; Fax: +91

44 8524306; Tlx: (953) 0416006

Mumbai

7th Floor, Maker Chambers IV, Nariman Point, Mumbai 400 021, Maharashtra;

Tel: +91 22 2833293; Fax: +91 22 2872968; Tlx: (953) 01183808 Postal

Address: PO Box 507, Mumbai 400 001, Maharashtra;

New Delhi

PO Box 21, Hamilton Hse, A Block, Connaught Place, New Delhi 110 001; Tel:

+91 11 3327602; Fax: +91 11 3715352; Tlx: (953) 03166420

THE HISTORY OF AMERICAN EXPRESSThe History of American Express is a fascinating one, filled with interesting

and sometimes quirky characters who through a combination of brains,

perseverance and luck shaped the companys development during the past

century and a half. Their vision of what American Express should become haschanged over time, resulting in a company that has had many faces during its

long history.

It all dates back to 1841- to the city of Buffalo, New York when Henry Wells

established a service to carry goods, money, valuable and financial paper from

the East to the West Coast of America. His first trip took him and a carpetbag-

full of gold, silver and securities from Albany to Buffalo. The trip took four

days and it brought Express service to Buffalo.

In 1850, Henry Wells whose firm, Wells and Company had earned a reputation

as an innovator in the Express trade merged with its major competitors to form

a new entity called American Express Company. Henry Wells was elected its

President with William Fargo as its Vice President.

A few years later John Butterfield, another founder of American Express

Company, instituted an additional separate enterprise- The Overland Mail- with


33/89

the Pony Express- which was to contribute one of the most colorful episodes in

the history of the American Frontier.

Today this group provides banking services outside the United States through

its branches and the offices of subsidiaries in 25 countries, and through more

than 2000, correspondent banking relationships. Important activities include

export-import and working capital finance, corporate and project finance,

foreign exchange and operations service.

Banking operations started in India in Bombay in the year 1922.

In the first half of the 20th century American Express continued to grow

rapidly. It was the only company to provide financial services in some cities

during the low point of the Great Depression.

Throughout the 1950s, the company was consistently growing in all areas of

business interest-Travel, Travel Related Financial Services and International

Banking. It was in 1950 that American Express made its entry into Indias

capital city, New Delhi.

1958 was a hallmark in the history of American Express. The American Express

Credit Card was introduced in US dollars and Canadian dollars and won

immediate acceptance (In 1969, the word Credit was dropped from the name

of the American Express Card).

1960 saw the emergence of a new management headed by the Companys

seventh President, Howard L Clark. Under his new direction was planned

expansion of Travel Related Services and its extension into new service areas tomeet the demands of an increasingly sophisticated and affluent clientele. The

use of the American Express Travelers Cheque grew phenomenally after 1960,

largely under the impetus of strengthened and innovative marketing.

It was in 1983 that the American Express Travel Related Services Company,

Inc. came into existence as a subsidiary of the American Express Company.


34/89

IDS Financial Services Inc., a leader in the financial planning field because a

part of American Express in 1984. It offers individuals and businesses sound

financial plans, products and services to fulfil those plans.

American Express was the first company to make Personal Banking and

Financial Services available at sea. This was done in conjunction with Cunard

Line on board Cunards flagship vessel, Queen Elizabeth II.

In May 1985, AEIBC was renamed American Express Bank Limited (AFBL),

to enable the Company more directly capitalize on the American Express name.

In 1986, for the first time, the company passed the milestone of one billion

dollars in net income. In 1986, it also relocated to its new Headquarters building

in New York Citys World Financial Center.

In June 1987, the TRS company introduced an exciting new product, the

Optima Card available to American Express Card members in the United States.

In addition to enjoying the same unparalleled benefits that the American

Express Card provides, the Optima Card offers Card members the added facility

of extended payments on purchases at an extremely attractive rate of interest.

In November 1987, the American Express TRS in India introduced the US

Dollar billed Corporate Card to the Indian Corporates. The Card was a

revolution in the then nascent Card market as American Express was the only

Card issued in India that could be used overseas. The Card usage had certain

restrictions as the Card issuance and usage was strictly under the Reserve Bank

of India guidelines.In May 1993, the Indian Rupee Personal Card was introduced. The Card was

provided to a set of exclusive customers and even the Advertising campaign that

ran said- Quite frankly the American Express Card is not for everyone. The

Company continued making new forays into the rewards and benefits that the

Card members could enjoy. This Card and all subsequent Card products billed

inIndian rupees were valid for use in India. Nepal and Bhutan, thus making the

American Express Cards the only products to be valid in Bhutan.


35/89

In August 1996, American Express Corporate Card billed in Indian Rupees was

launched for Corporates in India. This is a Charge Card Product and does not

have a competition till date in the market. This product provides exclusive

Travel and Entertainment benefits to the Corporate Traveler.

In April 1998, the Indian Rupee Gold Card was launched. In November 1998,

the Indian Rupee Global Revolving Credit Card the GRCC- was launched.

The product proposition was termed the best Marketing Proposition for the year.

In October 1999, Global Validity was introduced on all Indian Rupee billed

Card products.

In October 2000, the American Express Gold Credit card was launched. This

product redefines Gold Standards in Credit Cards in India.

By contrast, the rough and tumble freight forwarding businesses that launched

the American Express story are long gone. Other activities that were once the

mainstays of the Company are no longer its primary lines of business. Changing

times and changing customer needs have guided American Express to reinvent

itself continually, and that capacity for reinvention makes American Express

unique. It has demonstrated a remarkable ability to survive and even thrive

despite significant setbacks and changing external forces- mergers and

takeovers; government interventions; industry turmoil and consolidations;

scandals and even wars.

Through this long journey there is, however, one characteristic of American

Express that has remained constant its commitment to providing extraordinary

service to its customers, no matter who or where those customers may be. It

was just as true in 1914, when American Express was helping stranded tourists

in Europe at the outbreak of World War 1, as it was in 1998, when employees

were assisting customers during the national crisis in Indonesia.


36/89

The American Express Card has now been in existence for over 40 year. In

India, the American Express Card presence has been since 1987. The

Organizational structure of the Company vis--vis Card business has always

been changing with respect to the changes in the Companys Strategic

Objectives over the years.

THE AMERICAN EXPRESS CARD BUSINESS

The Unique Operating Proposition

5 core elements distinguish how the American Express Card works to serve

Card members.

1. 24 hours Customer Service

We offer 24 hrs Customer Service in 5 cities (Delhi, Mumbai, Chennai, Calcutta

and Bangalore). We employ superior technology (Call Re-routers) to serviceour Customers in these cities from Delhi.

2. Card member Recognition

American Express Card is an exclusive Card Product. Most American Express

Card members are the top-of-the-line customers in the market. Amex Card

members are High Net worth Individuals. Research proves that Amex Cardmembers spend approximately 2.5 times on their Card compared to VISA or

Master Card holders.

3. No pre-set spending limit

Amex Charge Cards do not have a pre-set spending limit (Charge Card). The

charges on the Card are approved on the basis of the financials provided by the

CM initially and the subsequent spending and the payment patterns.


37/89

4. The Charge Card difference

The Amex Card worldwide is predominantly a Charge Card. The Credit Card

(Optima/GRCC) have been launched well after 30 years of being in existence.

Our mainline revenue is still the Charge Card.

5. Global Travel Service Office (TSO) Network

American Express is the worlds largest Travel Service Network. We have over

1700 offices in more than 130 countries.

Procedure for acquiring The American Express Card

How to get one?

To become an American Express Card member, the prospect must meet the

following criteria

The prospect must send in an Application

Must be above 18 years of age

Must meet the American Express Card Approval Criteria

Various Amex Cards have different Approval Criteria

The issuance and usage of the Card is governed by the local market

governing bodies, regulations and guidelines.

When approved, is provided with a Card and a Card membership number.

Cards are valid for 3 years

The Card member can use the Card at all American Express Service

Establishments.


38/89

HOW DO AMEX GETS ITS CARD MEMBERS?

AmEx sources its Card members through the following channels

Marketing, Sales and Advertising

External Sales Agencies

Direct Mailers

Call-ins

Walk-ins

Take ones

Representative offices Rep Get Member

Member Get Member

Staff Get Member

Conversions

Cross Selling Opportunities

AMERICAN EXPRESS CARD

World-wide privileges

(Many of these privileges may or may not be available on the Indian Rupee

Card Products. There may be other privileges exclusively for the India market).

American Express Cards worldwide provide a host of privileges to its Card

members. Many of these privileges have over the time, have grown to be brand

names in themselves-like the Moneygram. They not only provide immense

value to our 44 million Card members, they have also in the past acted as life


39/89

savers for many American Express Card members- like Global Assist that

provides Doctors-on-call to the card members.

The various privileges that the Amex Card provides to its Card members are:

1. Assumed Hotel Reservations

When a CM books his Hotel room with the Amex Card as the Payment

Instrument, he is assured of the following.

The room reservation is guaranteed and is held till 1200hs the next day.

If upon the arrival of the CM, the hotel does not have a room for him, the hotel

provides him with similar accommodation in a hotel which is within the same

district of the city, pays for his transportation to the new hotel and pays for one

Telephone Call anywhere in the world.

The Assured Hotel Reservations is a privilege provided by select participating

hotels under a specific American Express Marketing Program called the SHRP-

Select Hotels Rate Program. All participating hotels are bound by the contract

to provide these basic facilities to all Amex Card members.

2. Client Mail

Amex CMs can use the Amex TSOs as their Post office. Literally. All CMs who

do not have permanent addresses in the town they are in can use the Amex TSO

as their address for contact. All mail for such CMs is kept at the TSO and the

CMs can check with the card members Desk in person and collect their mail.

In all such cases, where the mail is required to be forwarded to another Amex

TSO address (and not any other address- esp. when the CM moves from onetown to the other), Amex charges the Card members Account with 1 US dollar.

All mail, which remains uncollected after a month of its arrival, is returned to

sender.

3. Detailed billing statement (ICRS)

Amex Card Statements are called the International Customer Relationship

Statements (ICRS). The statements are detailed to the extent that all the


40/89

information pertaining to all charges incurred by the CM and those that have

been posted into the Amex Systems, reflect on the statements.

4. Direct Debit (DD)

Amex CMs enjoy the privilege of their Bank Accounts directly debited for all

the charges they incur on their Card within any Billing Cycle. The CM signs a

tri-partite contract with Amex and the Bank where he holds his Account. Amex

sends the monthly statements of account to the Bank directly, under advice to

the CM. The Bank sends the payments to Amex. The CM is thus, saved the

bother to follow up on his statements and payments.

5. Emergency Card Replacement (ECR)

Irrespective of where they lose their Card, Amex promises the lost Card

replacement within 2 business days to the CMs. This is a major value addition

to the privileges that we offer as we do not charge for a replacement Card and

also not for the courier charges if we are to replace the Card at a remote

location.

6. Emergency Cheque Cashing (ECC)

Travelling CMs can avail of Emergency Cheque Cashing on the card. They

need to produce the Card and also write a Personal Cheque in order to withdraw

cash. The amount on the cheque is the face value of the Cash that theywithdraw plus a transaction fees amount. The absence of a Personal Cheque can

be compensated by a Counter Cheque that the CM Desk would have with them.

A few points that have to be remembered during the ECC transaction are:

The ECC is available only at the Card members Desk at the Amex TSOs.

The amount that a CM can withdraw on his Card is determined and regulated by

his/her card issuing market.


41/89

The transaction fees is usually 2.5% of the transaction amount but may vary

from market to market.

The personal cheque can be of any bank in the world. It is presented to the Cms

Bank immediately on the same/ next work day. All bounced personal Cheques

on the ECC facility are given prominence for collections and receivables.

An authorization has to be taken from the nearest authorizations center for every

ECC transaction.

7. Express Cash

Express cash is another mode of availing cash on the card. Here the CM does

not need to carry any personal cheque but can withdraw the needed cash from

an ATM.

Amex has more than 80,000 ATMs worldwide and we are in the process of

launching more ATMs in India in the near future.

Both currency and travelers cheque can be withdrawn from the ATMs.

Currency could be the local currency or in major international currencies.

Travelers cheques are in 12 international currencies and attract a 1% transaction

fees. Overall, the ATM transaction attracts 2.5% transaction fees.

8. Express check-in, check-out facility

By the virtue of being an Amex CM, all participating hotels in the SHRP

Program provide all Amex CMs with an express check in and checkout facility.

The CM just needs to present his/her Amex Card at the reception upon arrival

and inform them over the phone at the Time of Departure and the Hotel takescare of the rest. This saves the CM a lot of valuable time.

9. Extended Payment Plan (epp)

In the US and certain other markets, CMs are provided with a facility to pay

their Travel and Airline charges at regular fixed intervals of time (with an

amount of interest). This is essentially under the assumption that the Travel and

Airline charges are of non- frequent category and the EPP aims to provide a


42/89

flexibility to repay these charges at intervals. However, the rest of the charges

on the CMs statement need to be paid upon receipt of the statement.

10. Global Assist

Global Assist is an International agency with its office in the US, which

provides Legal and Medical assistance upon request. When CMs require any

such assistance, they need to call Amex at the local market 24 hrs number. The

Global Assist number is then provided to the CMs who get in touch with GA.

GA then leads them to the nearest Doctor or Lawyer in the market, as they

would have databases of such utilities.

11. Insurance Services

Amex provides a variety of Insurance Services on all its products. By the virtue

of being a CM, an individual is insured against Personal Accident. When Amex

CMs buy Airline tickets on the card, they get additional Personal Accident

Insurance. Travelers cheque purchases gets more insurance. When CMs travel,

we also assist them with Medical Insurance Services.

In all such cases of Accident, the CMs deal directly with the Insurance Agencies

and not with Amex.

12. Moneygram

Moneygram is almost a Brand Name. It allows Amex CMs to wire money from

one TSO to the other anywhere in the world. The wiring of money hardly takes

any time as the money moves within Amex. The receiver can collect the money

at the receiving TSO within seconds of the money Transfer. In order to protectany money laundering attempts. Amex restricts the CMs from sending amounts

greater than USD 1000 per transaction.

13 Signature on File

Amex CMs can avail of Travel Services from the TSOs without actually going

across to one. All they need to do is to give Amex a call. The Airline tickets and

other Travel Documents are prepared and sent across tot he CM within the City/


43/89

Town limits, by courier. A nominal fee is charged to the CMs account each

time any such service is availed.

14. Supplementary Card Membership

All Amex Basic CMs (the primary Card Account Holders) can provide cards to

their spouses, friends and relative sand near and dear ones. The policy on the

scope of the supplementary card membership varies from market to market. A

basic CM can give as many as 99 supplementary cards on his/ her account.

However, the basic CM is responsible for all payments on the card account.

15. Transfer Out (Conversions)

CMs moving from one market to the other Amex market can easily convert the

currency of their card. This facilitates a smooth transfer of Debit/ Credit

balances if any on the previous card account which are then converted and

billed in the local currency in which the CM has now acquired the card.

However, all such transfers of card currencies would be dependent on the local

market card issuance policies.

16. World wide travel assistance

Irrespective of which market issues the card, all Amex CMs worldwide are

entitled to World class travel service facilities at over 1700 owned and

representative offices of American Express TRS in more than 120 countries in

the world.

17. Membership Rewards (MR)

One of the most rewarding benefits of the Amex Card membership, the

membership rewards is a program of Amex rewarding the CMs for spending on

the card. Each US dollar (converted into the local currency) spent on the card

and paid back, earns the CM, one MR point. These points can then be redeemed

against a host of retail and leisure purchases from a list of such options that the

card marketing team keep0s modifying with time.


44/89

18. Limited liability

In an event of the loss of the card, Amex provides the CM the benefit of limited

his/ her liability on the card. Before the report of the loss of the card, the CM is

liable to an amount of INR 1000 (or other amounts, which are product specific).

In case the card is misread after the report of loss of the card, the CM is not

liable to pay anything. The limits differ on cards issued in various markets.

AMERICAN EXPRESS CARD PRODUCTS IN INDIA

The various card products that American Express issues in India are:

INR personal card

INR gold card

INR corporate card

Corporate purchasing card

INR GRCC (Green and Gold)

US dollar corporate card

Co-branded cards (MTNL)

Affinity cards.

CHARGED CARDAmerican Express

Card

American Express

Green

Global Validity Yes YesLaunch Date 1988 1993

Fees IHRJoining Basic Rs. 1500 Rs.12000

Annual Basic Rs. 3100 Rs.2100

Supplementary Annual Rs.1500 Rs.950

MRNFTO Free Free

MRFTO Rs.400 Rs.400

Annual Fee Waiver No No

Maximum No. of supps No limit (max 99) No limit (max 99)

Min. individual income

Reqd.

Rs.200,000 Rs. 100,000

Delinquency charges 3.5% or Rs.100

whichever is higher

3.5% or Rs. 100

whichever is higher


45/89

Direct debit/standinginstant

Yes Yes

Lost card liability Before reporting lossRs.1000, after reporting

loss-nil

Before reporting lossRs.1000, after reporting

loss-nil

Dropbox locations in

India

228 across 8 cities 228 across 8 cities

24 Hour customer

service

Yes Yes

Commission free travel

cheque

Yes Yes

Duplicate SOA Yes, free of charge Yes, free of charge

YESOC Yes Yes

Monthly CM MagNewsletter

Yes Yes

Mail option hater Yes Yes

Travel services Yes Yes

No. of travel offices Yes, through 28 ownedTSOs and Rep offices in24 cities

Yes, through 28 ownedTSOs and Rep offices in24 cities

ATM network access Yes Yes

Insurance

Accidentaldeath/disability

Air-4, MM, Non-air-300k Air-4, MM, Non-air-300k

Permanent disablement Rs.100k Rs.100k

Home protection Rs.100K Rs.100K

Purchase protection Upto Rs.150 K for 90days

Upto Rs.150 K for 90days

Baggage loss insurance Upto Rs. 25000 Upto Rs. 25000

Credit life insurance Yes upto Rs.5000 Yes upto Rs.5000Emergency medical &Legal Asst.

Yes Yes

Replacement/Lost cardfacility

Yes,48 Hours Yes,48 Hours

Guaranteed Hotelreservations

Yes Yes

Express check in /out Yes Yes

Hotel/travel discounts Yes Yes

Airport/Business lounges Yes Yes

Affinity or joint card No No

Bed cheques Rs. 150 Rs. 150

Rewards programme Yes YesFee refund on productchange

On a prorate basis On a prorate basis


46/89

CREDIT PRODUCTS COMPARISON

Product Gold

GRCC

Citibank

Gold

SCB Gold HSBC Gold Green GRCC Citibank

classic

HSBC

classic

VICES/REQUIREMENTS

Cards Gold Gold Gold Green Classic Classic

NCH Date 200 1993 1992 1998 1991 1992

Annual (BASIC) 2000 2000 1500 750 500

Annual(Supplementary)

1000 1000 500 350 200

Product Gold GRCC Citibank Gold SCB Gold HSBCGold

Green GRCC Citibankclassic

HSBCclassic

Minimum no . o f s upps No l im it av ai labl e t ospouse and

dependent familymembers

Maximum of 2 Max. of 2 No l imit available tospouse and

dependent familymembers

Max of 2 Max of 2

M inimum i nd iv idua l

i n come requ ired perannum

Salaried: Rs.

150,000Self employed: Rs.100,000

Salaried : Rs.

156,000Self employed :

Rs. 156,000

R s 175 ,00 S al ar ie d:

Large / MNC (


47/89

Others 96K

Monthly interest rate Tier1-

Tier2-290Intro BT- 1.79

29 5

29 5

25 0

29 0

Tier1 279

Tier2 290Intro BT

2.79

29 5

29 5

27 5

27 5

Interest rate payment

IO D

21 days 20 days 20 days 21 days 20 days 20 days

Averages Rs. 100 or 3.5%

whichever is more

2.955 or Rs. 100 in

month one, 2.95%or Rs. 150 in

month two

Rs. 100 or 3.5%

which ever is more

Rs. 100

Monthly newsletter Yes Yes Yes Yes No NoTravel service Yes Yes-thrualliance with

travel housein 10 cities

Ye s

No. of traveloffices

Yes-thruowned 28

TSOs & Rep

offices in 24

cities*

Travel Houselocations 10

cities

Sita travels in 22cities and Thomas

cook in 7 cities

Yes-thru owned28 TSOs & Rep

offices in 24 cities

Travel Houselocations in 10

cities

Sita Travlocations

22 citie

Advances (INR) 20% of LOC Rs. 10,000 in

year one and60% of LOC

after year one

Upto 60% of LOC 10% of LOC

Network Access 31 in 7 cities

(forMasterCard it

is 150 across12 cities)

35in 7 citires 31 in 7 cities 35 in

cities

Credit facil ity Upto 2.5times monthly

salary

Upto 2.5 timesmonthly salary Upto 2.5 timesmonthly salary Upto 2times

month

salary

Accidental death/

liability

Air: MM Air : MM Air : 1.0 MM Air : 1.0 MM Air : 0.5 MM Air : 0.6


48/89

Non Air :

300K

PermanentDisablement

: 100K

Non Air: 200K

Permanent

Disablement:NI L

Non Air : 300K

Permanent

Disablement : NIL

Non Air : 200K

Permanent

Disablement : NIL

Non Air :

100K

PermanentDisablement :

NI L

MM

Non Air :

200K

Purchase

protection (INR)

Upto Rs. For

90 days

Rs. 40,000

for 90 days

Upto Rs. 50, 00

for 180 days

Upto Rs. 50,000

for 90 days

Upto Rs.

15,000 for 90

days

SERVICES/REQUIRE

MENTS

Credit l i fe insurance(INR) (Waiver of o/s

upon CM demise)

No Premiumcharged Rs.

250 for uptoRs. 50,000

Free upto Rs.40000

No Premiumcharged-Rs. 250

for upto Rs.50,000

Freeupto Rs

20000

Emergency legal and

Medical assistance

NA No Through

VESP/Master

Assist

NA No No

Replacement/Lost

Card Facility

48 hours

(2bizdays)

48-72hours 48-72 hours Rs.

100

48 hours (2 biz

days)

48-72 hours

G ua rant eed Hotel

Reservations

Yes

(WHRP/SH

RP)

Yes through

IBTC

domestic

Yes Yes

(WHRP/SHRP)

Yes through IBTC

domestic

Ye s

Express check in/out Yes

(WHRP/SHRP)

Yes Yes Yes

(WHRP/SHRP)

Yes No

Hotel/Travel Disc. Yes(WHRP/SH

RP)

Yes throughIBTC

domestic

Ye s(WHROP/SHRP)

Yes through IBTCdomestic


49/89

Airportlounges/business

lounges

7 in India 7 in India 12 7 in India NA NA

SERVICES/REQUIRE

MENTS

Af fini ty or joint

cards

NA NA NA Indian Oil Master

Card, Philips

Visa/Mastercard,

IndianAirforce/Army,

Womens Card(Visa)

Shoppers

Stop

(Mastercard

IndianAirforce/Arm

, WomensCard (Visa)

Bad cheques (INR) Rs. 150/- Rs. 100/- Rs.150/- Rs.100/-

Rewards Programme NA NFTO-Free

FTO Free

Available only

for fee

redemption

NFTO:

Free FTO:

NFTO Free

FTO : Free

Available onl

for Free

redemption

Min.

repaymentAMT

5% or Rs.

100/-whichever is

more

5% or Rs. 100/-

whichever ismore

5% or Rs.

100/-whichever is

more

5% or Rs. 100/-

whichever ismore

5% or Rs. 100/-

whichever ismore

5% or Rs.

100/-whichever

is more

C ard li ab il it y B ef or e re po rtof loss: 1000

After reporting

loss : Nil

Before report ofloss: Unlimited

After reporting

loss : 1000

Before reportloss:

Unlimited

Afterreporting

loss : Nil


After reporting

loss : 1000


After reporting

loss : 1000

Beforereport of

loss:

Unlimited


50/89

American express in India and the Global market

American Express strategy for the Indian market was to build on the success of

the charge card business and to offer a wider range of financial products and

services developed by American Express and its alliances with leading players.

AmEx had carefully shielded itself from the battle by nurturing a small niche at the

top end of the market - the brand perception of their card was - a status symbol for

a select few. But today, when the consumerist wave is hitting the country, and

credit card usage is expanding in the burgeoning middle class, AmEx is quietly

junking most of the essential of this niche strategy. Its distinctly upscalepositioning is gradually being made more mass market. But to prevent the AmEx

brand from being completely robbed of its exclusive status, it is slowing down the

pace of change.

More specifically the advertising today has shifted emphasis - AmEx is talking

more about the tangible benefits that the card offers rather than the premium

segment that it belongs to. Instead of the traditional policy of inviting select

members to join up, it has appointed sales agents. In addition, it has launched its

member-get-member scheme. American Express launched the American Express

Credit Card in India in 1998, the first card product to be marketed by American

Express here. With a monthly interest rate of 1.99 percent on revolving balances

the lowest in India. The card also offers a balance transfer service with an interest

rate of 1.45 percent.

An innovative scheme offered by American Express, called Balance Transfer

Service, helps the cardholder to pay off outstandings on other credit cards. Amex


51/89

will pay the card issuer and transfer the amount due to the Amex card. And for the

first six months the Amex cardholder gets the benefit of a lower interest rate of

1.99% per month. For frequent users, Amex has a scheme for waiving the annual

fees if the cardholder spends more than Rs. 45,000 in the preceding 12 months.

Research has revealed that consumers today are more discerning than ever before

about what they want from their credit cards. They are looking for real value and

genuine savings. The American Express Credit Card not only offers great value,

but also provides a wide range of privileges, services and rewards.

At 1.45 percent for the first six months and 1.99 percent thereafter, the new cards

interest rate was significantly lower than the 2.95 percent charged by most other

credit card issuers. And the balance transfer feature was the first of its kind in

India. Other card benefits included access to the award-winning Membership

Rewards program, free travel insurance and related travel service benefits,

Purchase Protection, limited loss liability, cash advances at ATMs, card acceptance

at gas stations and, as always, 24-hour customer service.

Its Indian operations have staged a turnaround during the year ended March 31,

2000, posting a net profit of Rs 27.7 crore, a three-fold rise over the previous

years net profit of Rs 8.2 crore. The banks operating profit during the year stood

at Rs 74.7 crore, a 25 per cent increase over the previous years corresponding

figure of Rs 59.5 crore. Amexs total income during the year however dropped four

per cent to Rs 445.1 crore from Rs 461 crore in 1998-99, largely on account of a 14

per cent drop in interest income to Rs 302.9 crore (Rs 345.3 crore). Non-interest

income during this period rose 23 per cent to Rs 142.2 crore from Rs 115.8 crore

the previous year. Interest expenses during the year fell by 30 per cent to Rs 196.4

51


52/89

crore from Rs 254.4 crore the previous year. The sharp fall in the banks interest

expenses was mainly on account of the drop in its deposit base during the year.

Operating expenses during the year were higher by 18 per cent at Rs 174 crore (Rs

147.1 crore) which included Rs 11.4 crore relating to the banks voluntary

retirement and severance scheme announced in 1999.

During the year ended March 31, 2000, Amex total deposits fell 22 per cent to Rs

1,418.3 crore from Rs 1,733.2 crore the previous year. Advances also fell eight per

cent to Rs 8,919.4 crore from Rs 9,614.5 crore in 1998-99. American Express

Banks net non-performing assets during the year increased to 4.32 per cent from

2.32 per cent the previous year.

It is widely perceived that Citibank is the most established player in the credit card

business in the country; so when a travel-related services company like American

Express, which is only into charge cards in India till date, claims it is the largest

card issuer in India today, it merits a second look. AmEx bases its claim on the fact

that cardmember spending is a more realistic measure of the volume of business

than the number of cards -- plastics -- issued. In other words, plastics cost money

whereas increased spending by cardmembers gets you money. And that's also the

basis of AmEx's claim of being the world's largest card issuer with billings of over

USD 208 billion.

Since AmEx introduced the rupee-billed Green Card in 1993 and the rupee- billed

corporate card in 1996, its business in terms of billings has grown by 75 per cent

against an industry average of over 40 per cent. What the company doesn't say so

explicitly is that a) since AmEx cards are charge cards positioned as a lifestyle

product and have a membership profile of frequent travelers and high spenders on

52


53/89

entertainment, the return from each card would be that much higher and b) since

other cards available in the market are largely credit cards with a revolving credit

facility targeted more at the middle class user, the returns would accrue on a longer

term. Further, the fixed income from a card in terms of annual subscription fee is

more than double for an AmEx personal card compared to that of a normal credit

card.

Its offerings already positioned as lifestyle products, AmEx has just introduced the

Gold Card, clearly for the high-income spenders. There are other Gold cards in the

market. Though AmEx pioneered the Gold Card concept globally, most other

leading players in the card business in India already have their gold cards. But the

difference is that brand AmEx in India already has a high-end premium image on

account of its exclusive card operations instead of routing them through Visa or

MasterCard, like other card issuers do. So penetration for a product that

consolidates its premium image could be easier. Like other cards from AmEx, the

Gold Card is again a charge card, with no pre-set spending limit and with world

class services.

One AmEx card that could possibly shed the premium image is the corporate card,

which a client or company issues to its employees who travel extensively on

business. The employees - from a sales executive to a senior manager - have to

necessarily use the card because the company's travel and entertainment expenses

are monitored through the spending on the card. Since its introduction in 1996,

over 600 small and large business houses in India have gone in for the AmEx

Corporate Card.

53


54/89

Tapping such potential like Am Ex does, means offering competitive, if not the

best services. The marketing efforts of the company are two-pronged: ``First is to

acquire the right customer and the second is to ensure customer loyalty.'' And this

has to be practiced in a scenario where the market is getting increasingly

segmented on price, usage purpose and the convenience platforms.

54


55/89

AMERICAN EXPRESS BANK

Liabilities and assets

(Amount in Rs. lakh) Figures in bracket indicate percent share in total

Year 1998 1999

(5) (6)1. Capital 1568 1568

(0.5) (0.5)

2. Reserves and Surplus 42887 23155

(13.3) (7.1)

2.1. Statutory Reserves 9221 9384

2.2. Capital Reserves 797 1538

2.3. Share Premium - -

2.4. Revenue and other Reserves 741 -

2.5. Balance of Profit 32129 12233

3. Deposits 198111 173320

(61.5) (52.9)

3.1. Demand deposits 30392 39387

(i) From banks 3206 4021

(ii) From others 27186 35366

3.2. Savings bank deposits 9874 11797

3.3 Term deposits 157846 122135

(i) From banks 1653 507

(ii) From others 156193 121629

3.A. Deposits of branches in India 198111 173320

3.B Deposits of branches outside India - -

4. Borrowings 60025 107326

(18.6) (32.8)4.1. Borrowings in India 60025 105612

(i) From Reserve Bank of India 4200 20780

(ii) From other banks 40000 40568

(iii) From other institutions and

agencies

15825 44264

4.2. Borrowings outside India - 1714

5. Other liabilities 19644 22193

(6.1) (6.8)

5.1. Bills payable 1800 2094

5.2. Inter-office adjustments 1417 1573

5.3. Interest accrued 8456 9646

5.4. Others (including provisions) 7971 8880Total Liabilities 322236 327562

(100.0) (100.0)

1. Cash in hand 653 847

(0.2) (0.3)

2. Balances with RBI 23522 15321

(7.3) (4.7)

3. Balances with banks in India 460 1967

55


56/89

(0.1) (0.6)

4. Money at call and short notice 57140 48544

(17.7) (14.8)

5. Balances with banks outside India 6431 1459

(2.0) (0.4)

6. Investments 98434 130222

(30.5) (39.8)

6.A. Investments in India 98434 130222

(i) Government securities 67255 72625

(ii)Other approved securities - -

(iii) Shares 213 213

(iv) Debentures and bonds 29013 40157

(v) Subsidiaries and joint ventures - -

(vi) Others 1954 17227

6.B. Investments outside India - -

(i) Government securities - -

(ii) Subsidiaries and joint ventures - -

(iii) Others - -7. Advances 103041 96145

(32.0) (29.4)

7.1. Bills purchased and discounted 8285 14106

7.2. Cash credits, overdrafts & loans 72216 67154

7.3. Term loans 22540 14885

Priority sector advances included in 7. 29184 28681

8. Fixed Assets 6701 7681

(2.1) (2.3)

8.1. Premises 2582 2545

8.2. Fixed assets under construction - -

8.3. Other fixed assets 4119 5136

9. Other Assets 25855 25376

(8.0) (7.7)

9.1. Inter - office adjustments (net) - -

9.2. Interest accrued 3183 2680

9.3. Tax paid 7905 7806

9.4. Stationery and stamps - -

9.5. Others 14767 14890

Total Assets 322236 327562

(100.0) (100.0)

Earnings and Expenses

Year 1998 1999

I. Interest Earned 32660 34527

a) Interest/discount on advances/bills 14933 13636

56


57/89

b) Income on investments 13357 15220

c) Interest on balances with 3551 4309

RBI and other inter-bank funds

d) Others 820 1363

II. Other income 12586 11578

a) Commission, exchange and brokerage 6673 7375

b) Net profit on sale of investments 2001 786

c) Net profit on revaluation of investments - -

d) Net profit on sale of land, (75) (72)

building & other assets

e) Net profit on exchange transaction 3639 3460

f) Miscellaneous income 348 29

Total(I+II) 45246 46105

Expenditure & Provisions

III. Interest expended 22063 25440

a) Interest on deposits 18115 17263

b) Interest on RBI/inter-bank borrowings 3650 4709c) Others 298 3469

IV. Operating expenses 11923 14799

a) Payments to and provisions for

employees

4033 5656

b) Rent, taxes and lighting 1094 1243

c) Printing and stationery 261 378

d) Advertisement and publicity 766 1150

e) Depreciation on bank's property 837 995

f) Directors' fees, allowances and expenses 2 1

g) Auditors' fees and expenses 21 22

h) Law charges 54 19

i) Postage, telegrams, telephones, etc. 1524 1795

j) Repairs and maintenance 446 556

k) Insurance 119 140

l) Other expenditure 2767 2843

V. Provisions and contingencies 4446 5049

Total expenses@ 33986 40239

VI. Profit 6815 817

Total (III+IV+V+VI) 45246 46105

57


58/89

RESULTS OF THE SURVEY

Questionnaire

QUESTION 1: WHICH AMERICAN EXPRESS CARD DO YOU OWN?

On being asked which American Express card the respondents owned, the reply was as follows:

58


59/89

INR personal card 5 respondents

INR gold card 5

INR corporate card 10

Corporate purchasing card 5

INR GRCC (Green & Gold) 5

US Dollar Corporate card 3

Affinity cards 5

Co-branded cards (MTNL) 4

QUESTION 2: DO YOU OWN SOME OTHER BRAND CARDS ALSO?

On being asked whether they owned any other brand cards apart from that of AmEx, the

reply was:

59


60/89

YES 22

NO 18

QUESTION 3: WHICH OTHER CARDS DO YOU OWN?

Overall, these 100 respondents own 220 cards of other brands apart from those offered by

American Express.

Citibank 5 respondents

HSBC 6

Bank of Baroda 9

Bank Of India 00

Standard Chartered 5

ANZ Grindlays 4

Times card 6

ICICI 4

SBI 43

QUESTION 4: OVERALL, HOW SATISFIED ARE YOU WITH YOUR AMERICAN

EXPRESS CARD?

Very satisfied 10respondents

60

7/29/2019 Customer Satisfaction Study of American Express Cardmembers (Final Draf

Date post:	14-Apr-2018
Category:	Documents
Upload:	utkarsh-singh-sisodia
View:	228 times
Download:	0 times