By Diana Milne
Private jets, yachts, and works of art — it’s all in a day’s work for the American Express charge card team.
It's not every day that customers can use a card to pay for a private jet. But with American Express charge cards, the sky really is the limit.
With no spending limit and no interest charged on purchases they are a spendaholic's dream, offering customers the chance to buy just about anything they want.
To make the cards even more tempting to customers American Express has recently enhanced its Green and Gold charge cards offering benefits including travel accident insurance of up to US$50,000 for the Gold Charge Card and US$100,000 for the Green Charge card, and free access to airport lounges across the world.
Premal Patel, marketing director for the MENA region, American Express Middle East, explains the benefits of joining the charge card club.
What types of customers are you targeting with your American Express charge cards?
There's a general perception in the market that American Express charge cards are for a certain kind of person and not everybody can have the product.
To a certain degree that's right - as we're targeting very specific consumer groups.
With our Green, Gold and Platinum charge cards we are targeting the mass affluent, high net worth individual.
Charge cards are targeted to those who are more mature financially and who have been through the credit cycle and have shown a good usage of a credit product and where people want a bit more flexibility in terms of their spend.
They don't want restrictions but they have to be able to pay their bill at the end of the month - in full.
There's no roll over or revolving credit on charge.
Why have you decided to enhance your charge card benefit packages?
American Express globally is a leader in the charge card business and they were the first ever products that we had in the cards business so they've been around for a long time.
But like any other products we need to over time refresh them and evolve them and we felt it was the right time to come in and look at the packaging of the product, and the features of the product and ask does it meet the consumer needs or are there new needs to be met. And part of our research in the market showed us that people were looking for an enhanced membership rewards package.
We've got over 200 plus partners on the membership rewards programme and recently we signed a number of new partners so we felt that this was a good opportunity to come in and refresh the programme.
What are the main differences between the usage of American Express charge cards and of American Express credit cards?
Charge cards are more of a lifestyle enabler and that's where we see the main difference.
If you are travelling for two months and you have a charge card you don't need to worry about how much money you have left, what is your spending power, etc.
Charge is there for people who want that flexible financial power. They are for people who want no pre-set spending limit and who want to go out and make some big ticket purchases.
Credit cards are more for everyday spend. People will use them in supermarkets and other retail outlets.
What do Middle East customers most use their charge cards for?
They are primarily used for travel. And that's air fares, holidays, hotels - and it's business travel and personal travel.
Secondly it would be mainly the large ticket items that they want to buy. It could be expensive pieces of furniture. It could be cars, it could be pieces of art.
Though there also seems to be a bit of a trend now where people are using their charge cards to pay for lower ticket items - primarily because those that are engaged in the membership rewards programme see the benefit and have redeemed points against some very good valued product services.
They see that if they get more points they can get more benefits. But primarily the cards are still used mainly for travel.
Why would a charge card be more suitable for large ticket purchases?
Mainly because there's no pre-set spending limit on charge cards.
The charge card allows you to spend as much as you want as long as you can pay your bill in full at the end of the month, which means they tend to be used for some large ticket purchases and by those who travel a lot.
And also there's a lot of insurance behind the purchases. There's a comprehensive insurance package on travel and on retail purchases.
I'm not sure though that people look at it from the insurance perspective, they look at it from the point of view of ‘if I want to make the purchase today, I don't need to arrange through my bank a loan or anything else. I've got it on my plastic and I can get it done'.
So what people are looking for from us is the immediacy and the convenience we offer.
What other benefits do the charge cards offer to Middle East customers?
The Platinum Card membership is for our high net worth individuals who are people looking for personalised service. For Platinum Card members in the Middle East we have personalised account managers which is quite unique because everywhere else in the world they don't have that.
And it's a 24 hour concierge service that they get which particularly appeals to customers in this region as that convenience factor is very important to them.
If they need to get something done they don't want the hassle, they want to just be able to pick up the phone and get it sorted.
We've even had people shipping flowers to their wives or someone else's birthday that they've forgotten through our concierge service or they've made restaurant bookings anywhere in the world.
The charge cards really appeal to people who are frequent travelers as we have an international airline programme and a number of deals with airlines and hotel chains.
The insurance benefits which are behind it are focused primarily for travel and that gives people peace of mind. And they also get airport lounge access.
Can you give some examples of the types of large ticket purchases that are made by customers in the region using their American Express charge cards?
It's not uncommon for people in this region to buy yachts, cars and about a year ago one individual even bought a plane using his charge card. We had quite a few transactions going through during the Boat Show in Dubai.
Our customers could be anywhere travelling around the world - they will see something they like, it could be a piece of art or something else, and they will buy it.
And we enable that to happen which is why they like us.
We are targeting high net worth individuals who are defined by the banks as people who have a million dollars or so in assets to invest.
Then you will have your super affluent who might have over US$3m. And then you'll have your ultra affluent guys who might have over US$30m.
We have quite a number of these guys on our portfolio.
Would you say customers in the region have been slower to take up your credit and charge card products compared to in other parts of the world?
I suppose cash has been king over here for a long time and cash is our biggest competitor.
You can ask any of the other big competition and cash is the one thing that everybody is going for here - about 91 to 92% of the transactions are cash-based.
There's only about 8% that are card-based which comes down to heritage and history. This region has grown off barter and cash. People like the feel of cash in their pocket. They are not used to making so many day-to-day transactions on cards like people are in the Western world.
How do people's spending habits differ here compared to other parts of the world?
The general difference with this region is people are still mainly using their card products for certain items over a certain threshold. They are not using it for more day-to-day purchases. Whereas if you go to somewhere like the US people actually buy a can of soft drink with a piece of plastic.
Because they are so used to everything being on plastic and it becomes ingrained as part of their every day behaviour. And here I think there's a big step change that needs to happen in the way people are buying now to get to the stage where they would use a piece of plastic to buy an AED1 drink.
How big is the market for charge cards in the Middle East?
It is very big because there are over 300,000 millionaires in the Middle East and that will probably grow to about half a million people who are millionaires by 2010.
And I would say that those millionaires are a prime audience for us and the customers we are targeting our products at.
But I think it's hard to define the numbers because there are so many people coming into the region and globally that are growing in terms of their disposable income. I think that basically the opportunity is as big as we want to make it.
What are you doing to tailor your credit and charge card products so suit the needs of the local market?
What we've done now is over the last three years we introduced local currency credit card products.
Whereas with charge cards customers get their bill in dollars our new credit cards are primarily local currency. So you get billed, if you are in the UAE, in UAE dirhams.
The advantage there is people are more willing to use their cards every day because there's not the foreign exchange mark-up that happens between the dollar and the local currency. We also launched the Dubai Duty Free card - and people use that because they get advantages at Dubai Duty Free.
How important is this region for you?
It is a fast growing region. I wouldn't say it's the fastest growing - but it's getting there.
It's seen as a very important market by global headquarters in London. There is a lot of investment that is being made by us into this region - particularly in terms attracting new talent from all over the world to come and work here. We are also investing in new offices in a number of markets. We've just introduced new offices in Jordan and Qatar.
We're developing some new service centers and we're trying to make our services more user friendly and available and accessible to the consumer.