MasterCard feels heat of crisis

June 10, 1999 -- THE economic crisis has changed the consumer behaviour of Thai MasterCard holders from purchasing luxury goods and services to relying on the buy-now, pay-later credit cards to manage their family finances, according to the Thailand representative of MasterCard International.

The crisis that began here in 1997 led to a reduction of 20,000-30,000 MasterCard credit card holders and a decline in transaction volume by 20 per cent compared to 1996, said Prithayut Nivasabutr. The drop resulted from cancellations of old cards, as well as participating banks withholding the issue of new cards as they tried to cope with mounting bad debts.

However, Prithayut said the situation had improved in 1998 with the issue of some 10,000 new MasterCards, although the spending volume of cardholders had remained relatively unchanged.

''What we have detected from the changing consumer behaviour is that before, customers used the cards to buy luxury goods or services, but now they used them to manage their family finances,'' he said.

Credit card transactions at supermarkets and gas stations have increased significantly, with more frequent use but less volume on each ticket. At participating gas stations, motorists are relying increasingly on MasterCard to pay for their gasoline bills, with frequency shooting up from 500,000 to 1 million transactions a month.

Prithayut also said that consumer confidence appeared to be improving in line with better prospects of the economy. A survey by MasterCard found that 40 per cent of respondents had increased confidence about economic prospects for 1999, compared to 20 per cent during a similar survey in 1998.

''At last, we begin to see some light at the end of the tunnel. Our economy is moving in a better direction,'' he said.

At the end of 1998, MasterCard claimed to have a Thai membership base of 310,000 customers. Some US$267 million in transaction volume was spent locally through MasterCards last year -- about 60 per cent of this was accounted for by foreign-issued cards, and the remainder by those issued locally.

To help Thai consumers better manage their payments, MasterCard plans to build up its campaign this year for Maestro, a debit or ''buy-now, pay-now'' card. There are currently 200,000 Maestro cards in Thailand, issued by Siam Commercial Bank, Radanasin Bank and Nakornthon Bank.

The Maestro cards, which are linked to holders' deposit accounts, are used as electronic cash. Prithayut said MasterCard planned to widen the number of outlets that accept these debit cards, which have to be transacted through pin pads at each point of sale.

Once a transaction is undertaken via a pin pad, the money is deducted from the deposit account of the customer. There are now about 2,000 outlets with these pads, and MasterCard International plans to increase the number to 7,000 this year.

Given that there are 15 million ATM-card holders and two million credit-card holders in Thailand, there is still ample room for growth in Maestro cards, helping middle- or lower-income earners to manage their cash.

''There might be a growth limit for MasterCards this year due to economic reasons, so we'll be trying to encourage customers, or those who are not yet ready to hold credit cards, to turn to Maestro instead,'' said Prithayut.

BY THANONG KHANTHONG