The Romanian credit cards and consumer finance market – in line with many of its Central and Eastern European neighbours – is starting to show signs of potential as an attractive emerging market.
The consumer finance market is currently very under-developed by European standards and the market (for credit cards in particular) clearly has a lot of potential. Lafferty estimates that the pre-tax profit for credit cards was $9 million in 2005, equating to $12.50 profit per card. This is promising when compared to a European average of $45 – but where profit per card can be as low as $8.
ING, Cetelem and now GE Money have recently established themselves in the market. With growing interest from a number of other foreign issuers and processors, it seems now is the right time for players to enter this market and put a stake in the ground. Although most of the major domestic banks have now been acquired, there are a number of other routes into the market – for example through acquisition of smaller financial institution portfolios (or finance specialists) or through partnership with retailers, which will be vital in building co-branded card portfolios. One of the key ways for issuers to drive acceptance and regular usage (transaction revenue) of credit cards will be through co-branding with retailers. There are also some private label or non-ICS retailer card schemes in the market that could be ripe for conversion.
