Credit cards drive competition in Indonesia

Kanika Saigal
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Banks are pressing each other hard for market share in credit cards. So much so that the government wants to impose limits on issuance.

A walk through any of Indonesia’s new shopping malls is an attack on the senses. Faced with wall to wall designer outlets and gourmet eateries, consumers are bombarded with incentives to spend money in a particular store. Using a credit card issued by Bank Mandiri in an Italian restaurant gets you 50% off your bill; Citibank’s credit card gives you a 10% discount on clothing bought in a well-known international clothing store; Bank Negara Indonesia (BNI) has a limited offer of a 40% discount at a sushi restaurant.

All the banks in Indonesia with retail-banking outlets want you to have their credit cards. The incentives to do so abound. It’s a similar story to that in many other emerging markets: strong economic growth in the past decade has led to the rise of the middle classes and domestic demand has become an ever more important aspect...