Emerging Opportunities in Kenya's Cards and Payments Industry

Transcription

1 Emerging Opportunities in Kenya's Cards and Payments Industry Market Size, Trends and Drivers, Strategies, Products and Competitive Landscape Product Code: VR0907MR Published Date: April

2 TABLE OF CONTENTS TABLE OF CONTENTS 1 Executive Summary Market Attractiveness and Future Prospects of Cards and Payments Industry Analysis of Kenya Cards and Payments Industry Drivers Macroeconomic Fundamentals GDP growth Annual disposable income Inflation rate Infrastructure Drivers Opportunity in mobile payments Evolution in M-Pesa Internet banking Emergence of contactless and NFC payments in Kenya Business Drivers Growing retail industry Evolution in mobile commerce Card Fraud Statistics Regulatory Framework Regulations pertaining to M-Pesa Emerging Consumer Attitudes and Trends Market Segmentation and Targeting Consumer Preference Price Convenience Services Competitive Landscape and Industry Dynamics Market Share Analysis by Payment Channels Cash transactions Credit transfer Cards payments Check payments Debit Cards Market Share By banks By scheme Credit Cards Market Share By bank By scheme Charge Cards Market Share Market Size and Growth Potential of Payment Card Industry Market Share Analysis by Type of Card Total Market Size and Forecast of Card Industry By volume of cards By value of transaction Emerging Opportunities in Kenya's Cards and Payments Industry Page 2

3 TABLE OF CONTENTS By volume of transaction Debit Card Category Size and Forecast By volume of cards By value of transaction Credit Card Market Size and Forecast By volume of cards By value of transactions By volume of transactions Prepaid Card Market Size and Forecast By volume of cards By value of transactions Charge Card Market Size and Forecast By volume of cards By value of transactions Company Profiles, Product, and Marketing Strategies Kenya Commercial Bank Strategies Kenya Commercial Bank key financials Barclays Bank of Kenya Limited Strategies Barclays Bank of Kenya key financials Standard Chartered Bank Ltd Strategies Kenya Commercial Bank key financials Appendix Methodology Contact Us About Timetric Disclaimer Emerging Opportunities in Kenya's Cards and Payments Industry Page 3

4 TABLE OF CONTENTS LIST OF FIGURES Figure 1: Current and Future Prospects of Various Cards in Kenya... 8 Figure 2: Kenyan Growth Potential of the Cards and Payments Industry by Area of Usage... 9 Figure 3: Kenyan GDP at Constant Prices (KES Billion), (Base Year ), Figure 4: Kenyan Annual Disposable Income, (KES Billion), Figure 5: Kenyan Inflation Rates (%), Figure 6: Kenyan Internet Penetration Levels, (%), Figure 7: Growth in Kenyan Retail Sector (US$ Million), Figure 8: Kenyan Card Fraud Statistics (KES Million), Figure 9: Kenyan Cards and Payments Industry Segmentation Figure 10: Kenyan Consumer Preferences by Card Type Figure 11: Number of POS Terminals in Kenya (Thousands), Figure 12: Kenyan Share of Payment Channels (%), Figure 13: Kenyan Value and Growth of Cash Transactions (KES Million), Figure 14: Kenyan Value and Growth of Credit Transfers (KES Million), Figure 15: Kenyan Value and Growth of Card Payments (KES Million), Figure 16: Kenyan Value and Growth of Check Payments (KES Million), Figure 17: Kenya Debit Card, Market Share by Bank (%), Figure 18: Kenya Debit Cards, Market Share by Scheme (%), Figure 19: Kenya Credit Cards, Market Share by Bank (%), Figure 20: Kenyan Credit Cards, Market Share by Scheme (%), Figure 21: Kenyan Charge Cards, Market Share by Scheme (%), Figure 22: Kenyan Cards and Payments Industry by Type of Card (%), Figure 23: Kenyan Cards Market Size by Volume (Thousands), Figure 24: Kenyan Cards and Payments Industry by Transaction Value (KES Million), Figure 25: Kenyan Cards and Payments Industry, Transaction Volume (Million), Figure 26: Kenyan Debit Card Category, Market Size (Thousands), Figure 27: Kenyan Debit Card Category, Market Size (KES Million), Figure 28: Kenyan Credit Card Category, Market Size by Volume (Thousands), Figure 29: Kenya Credit Card Category Market Size by Transaction Value (KES Million), Figure 30: Kenyan Credit Card Category, Market Size by Transaction Volume (Million), Figure 31: Kenyan Prepaid Card Category, Market Size (Thousands), Figure 32: Kenya Prepaid Cards Category, Market Size (KES Million), Figure 33: Kenyan Charge Card Category, Market Size (Thousands), Figure 34: Kenya Charge Card Category, Market Size (KES Million), Figure 35: Cards Offered by Kenya Commercial Bank Figure 36: Cards Offered by Barclays Bank of Kenya Limited Figure 37: Cards Offered by Standard Chartered Bank Kenya Emerging Opportunities in Kenya's Cards and Payments Industry Page 4

5 TABLE OF CONTENTS LIST OF TABLES Table 1: Kenyan GDP at Constant Prices (KES Billion), (Base Year ), Table 2: Kenyan Annual Disposable Income, (KES Billion), Table 3: Kenyan Inflation Rates (%), Table 4: Kenyan Payment Channels (KES Million), Table 5: Kenyan Cards and Payments Industry by Type of Card (Number in Thousands), Table 6: Kenyan Cards Market Size by Volume (Thousands), Table 7: Kenyan Cards and Payments Industry Size by Transaction Value (KES Million), Table 8: Kenyan Cards and Payments Industry by Transaction Value (US$ Million), Table 9: Kenyan Cards and Payment Industry, Transaction Volume (Million), Table 10: Kenyan Debit Card Category, Market Size (Thousands), Table 11: Kenyan Debit Card Category, Market Size (KES Million), Table 12: Kenyan Debit Card Category, Market Size (US$ Million), Table 13: Kenyan Credit Card Category, Market Size by Volume (Thousands), Table 14: Kenyan Credit Card Category, Market Size by Transaction Value (KES Million), Table 15: Kenya Credit Card Category, Market Size by Transaction Value (US$ Million), Table 16: Kenyan Credit Card Category, Market Size by Transaction Volume (Million), Table 17: Kenyan Prepaid Card Category, Market Size (Thousands), Table 18: Kenyan Prepaid Cards Category, Market Size (KES Million), Table 19: Kenyan Prepaid Cards Category, Market Size (US$ Million), Table 20: Kenyan Charge Card Category, Market Size (Thousands), Table 21: Kenyan Charge Card Category, Market Size (KES Million), Table 22: Kenya Charge Card Category, Market Size (US$ Million), Table 23: Kenya Commercial Bank Key Financial Indicators, Table 24: Barclays Bank of Kenya Limited Key Financial Indicators, Table 25: Standard Chartered Bank Kenya Key Financial Indicators, Emerging Opportunities in Kenya's Cards and Payments Industry Page 5

6 EXECUTIVE SUMMARY 1 Executive Summary Kenya is the testing ground for a revolution that could help extend financial inclusion to some of the poorest and most remote places in the world. Its m-payments channel is considered to be in the same league as Korea and Japan. Over KESXXX billion (US$X.X billion) worth of m-payments were made in 2011, equivalent to XX% of the country s GDP. With plans to form a currency bloc between Uganda, Tanzania, Burundi and Rwanda by 2012, Kenya could be the launch pad for a boom in electronic payments across east Africa. As mobile phone use rises, banks and governments in economies with less-developed payment infrastructures may be able to bypass investment in areas such as bank branches and ATMs. Instead, they can concentrate on tailoring their systems to benefit from the ever-increasing popularity of mobile phones as payment devices. Mobile is not the only part of the Kenyan payments system which is undergoing a period of growth; debit is also becoming an essential transaction platform. Despite the popularity of m-payments, debit remains the most popular payment option in terms of transaction volume. Debit card category registered significant growth during the review period Debit cards recorded remarkable growth during the review period ( ), with cards in issue increasing from X.X million in 2008 to X.X million in 2012, representing a review-period CAGR of XX.XX%. The transaction value of debit cards increased at a CAGR XX.XX%, from KESXXX.X billion (US$X.X billion) in 2008 to KESXXX.X billion (US$X.X billion) in 2012, almost eight times higher than spending on credit during the same period. There are now X.X million debit cards in the country. The nation s credit card category is relatively limited. Central Bank of Kenya (CBK) figures show there were XXX,XXX credit cards in circulation in total in 2012, with card spending of KESXX.X billion (US$XXX.Xmillion). Credit card spending registered a CAGR of XX.XX% during the review period. There is a general lack of enthusiasm for credit in Kenya, particularly among lower income groups who show a preference for prepaid products. This preference is part of the reason mobile money transfer through e- wallets has become so popular. Growth prospects in the prepaid cards category Prepaid cards are showing some encouraging signs of growth, although MasterCard has not yet launched any such product in the country. The only pure prepaid product available is issued by Visa. CBK figures show there were XXXXX prepaid cards in circulation in 2012, an increase of XX.X% from 2008 figures. Spending on prepaid cards registered a decline during the review period, from KESXXX.X million in 2008 to KESXXX.X million in Emergence of NFC-based transit cards In 2012, Google rolled out a near-field communication (NFC) card called the Beba Card for use on public transport in Kenya s capital Nairobi. The card will be used on the Citi Hoppa buses. The Beba Card is a prepaid product that can be loaded with up to KESXX.XXX (US$XXX) and will be marketed to commuters. Users can check their balance and view a history of their transactions on the Beba website. The Kenyan cards and payments industry is highly mobile driven and many firms are attempting to replicate the success story of Safaricom s M-Pesa. Significant increase in internet users to drive the growth of online retail in Kenya The volume of internet users more than doubled in 2012, from X million in 2011 to X.X million in Government investment in fiber-optic cables is expected to increase the number of users, which will have a positive impact on internet banking. Emerging Opportunities in Kenya's Cards and Payments Industry Page 6

7 EXECUTIVE SUMMARY Adoption of effective security measures resulted in a low level of card fraud During the review period, the central bank mandated the use of chip-based ATM cards and EMV standards for credit cards, in order to tackle card fraud. Moreover, the introduction of transaction alerts via SMS and the adoption of stronger authentication methods for online transactions are expected go some way to helping combat fraud over the forecast period. As of 2012, the value of card fraud in Kenya was KESX.X billion (US$XX.X million), representing a review-period CAGR of XX.XX%. Emerging Opportunities in Kenya's Cards and Payments Industry Page 7

8 MARKET ATTRACTIVENESS AND FUTURE PROSPECTS OF CARDS AND PAYMENTS INDUSTRY 2 Market Attractiveness and Future Prospects of Cards and Payments Industry Kenya s cards and payments industry has expanded rapidly. The emergence of mobile money (M-PESA) in 2007, and its rapid acceptance rate, shows the attitude of Kenyan residents towards innovative payment channels. The introduction of plastic cards was received well by citizens however, their reliance on cash and M-PESA is still significant. In 2012, the Kenya banker association initiated a project, converting all payment cards into secured EMV cards to control the increasing levels of fraud in the country. The industry is expected to register a CAGR of XX.XX% over the forecast period to reach KESX.X trillion (US$XX.X billion) by the end of Given this growth rate, the industry provides card issuers with growth opportunities. Over the forecast period, prepaid cards are expected to grow at a CAGR of XX.XX% as a result of the growth in the debit card segment which is projected to grow at a CAGR of XX.XX%, to reach KESX.X trillion (US$XX.X billion) in The credit cards category is expected to grow at a CAGR of XX.XX%. Figure 1: Current and Future Prospects of Various Cards in Kenya Source: Timetric analysis Timetric Emerging Opportunities in Kenya's Cards and Payments Industry Page 8

9 MARKET ATTRACTIVENESS AND FUTURE PROSPECTS OF CARDS AND PAYMENTS INDUSTRY In Kenya, mobile commerce, corporate procurement, gift cards, travel and government welfare schemes possess positive levels of growth potential in terms of prepaid card opportunities. Prepaid travel cards are a key growth area as an increasingly the nation s population are taking leisure vacations and business trips. In terms of debit cards, retail sales, utility bill payments and entertainment are some of the main areas of usage. Credit and charge cards have limited growth potential as government regulations restrict their issuance and usage. At a corporate level, charge cards may be used to meet a firm s purchasing needs as such cards have a fixed payment timeline. Figure 2: Kenyan Growth Potential of the Cards and Payments Industry by Area of Usage Source: Timetric analysis Timetric Emerging Opportunities in Kenya's Cards and Payments Industry Page 9

10 ANALYSIS OF CARDS AND PAYMENTS MARKET DRIVERS 3 Analysis of Kenya Cards and Payments Industry Drivers 3.1 Infrastructure Drivers Opportunity in mobile payments Kenya is the testing ground for a revolution that could help extend financial inclusion to some of the poorest and most remote places in the world. Its m-payments channel is considered to be in the same league as Korea and Japan. Over KESXXX billion (US$X.X billion) worth of m-payments were made in 2011, equivalent to XX% of the country s GDP. With plans to form a currency bloc between Uganda, Tanzania, Burundi and Rwanda by 2012, Kenya could be the launch pad for a boom in electronic payments across East Africa. As mobile phone use rises, banks and governments in economies with less-developed payments infrastructures may be able to bypass investment in areas such as bank branches and ATMs. Instead, they can concentrate on tailoring their systems to benefit from the ever-increasing technology and popularity of mobile phones as payment devices. In total XX% of Kenya s population own a mobile phone, compared to the XX% that have access to formal banking arrangements. The opportunities appear even greater in Tanzania, where just XX% of its XX.X million population have access to financial services. Around XX% of Tanzania s population is classed as "financially excluded" and its mobile penetration is only slightly lower than Kenya, at around XX%. Uganda, with a population of XX.Xmillion, is another country which has much to gain from the rise of m-payments. As the economies of the east African bloc integrate their electronic payment infrastructures, it should become easier to make transactions between and within these countries. "This paradigm shift, a change in technology that is enabling people to conduct business in a different way, is not replacing existing infrastructure like branches and bricks-and-mortar," said Mark Richards, a partner at private equity house Actis, which specializes in Africa finance. "In many places the infrastructure simply does not exist. If you had never built these bank branches and the rest of it you would do transactions a different way given the technology that s available today." Driving this paradigm shift is Africa s biggest m-payments firm, M-Pesa. The business was initially established by DFID, the UK s Department for International Development and Vodafone subsidiary Safaricom. The CBK has also played a role in the development. Its strategy has been based on promoting the uptake of mobile-based financial services to its rural, unbanked population. It all points to a clear economic rationale for the development of m-payments in Kenya and beyond. M-Pesa and South Africa-based m-payments provider MTN expanded in Uganda and other east African markets. They are banking on the economies becoming more closely integrated and payment volumes increasing Evolution in M-Pesa Kenyan mobile phone-based money transfer service M-Pesa continued to go from strength-to-strength in 2009, ending the year with Xmillion users, equivalent to XX% of the country s population. A joint venture between UK mobile network operator (MNO) Vodafone and Kenyan MNO Safaricom, M-Pesa appears to build on its success in 2010 thanks to a number of innovative service enhancements. The latest of these follows an agreement with Kenya s ATM and electronic POS network operator Kenswitch to allow bank customers to send money to M-Pesa accounts by means of an ATM transaction. Family Bank has become the first Kenyan bank to announce its participation in the new service, Chapaa Chap Chap (CCC), which costs KESX.XX (US$X.XX). Kenswitch, which is owned by a consortium of Kenyan banks, provides switching services for some XXX ATMs. Emerging Opportunities in Kenya's Cards and Payments Industry Page 10

11 ANALYSIS OF CARDS AND PAYMENTS MARKET DRIVERS A significant enhancement brought about by the CCC service will be consumer convenience, in that it eliminates the need for bank customers to withdraw cash at an ATM and then seek an M-Pesa agent to make a deposit before undertaking a transfer. The CCC service also enables bank customers who are not M-Pesa account holders to make transfers to M-Pesa accounts. This CCC service also overcomes one of the problems faced by M-Pesa: cash flow constraints experienced by some of its XX,XXXagents in Kenya, especially in rural areas where consumers more frequently make cash withdrawals than cash deposits. According to Safaricom, M-Pesa s monthly person-to-person transaction volumes in September 2009 totaled US$XXX million, up from US$XXXmillion in January The CCC service follows another significant breakthrough made by M-Pesa in October 2009, when it launched a mobile phone remittance service between the UK and Kenya. First mooted in March 2008, the launch was delayed by regulatory hurdles which were resolved following negotiations including those relating to foreign exchange issues between the Bank of England and the Central Bank of Kenya Internet banking Internet banking mechanisms are globally recognized and have played a significant role in the payment system of emerging economies. Nonetheless, the internet payment methods have not been fully utilized in Kenya, due to the low internet penetration levels and the emergence of mobile payment services. Furthermore, over half of Kenya s population lives in rural areas and urbanization growth rates have been weak. However, there exists high interest among younger consumers and increasing internet penetration levels are expected to support internet banking over the forecast period. Internet penetration rates grew from X.X% in 2007 to XX.X% in Emergence of contactless and NFC payments in Kenya Kenya s payment cards underwent a process of evolution during the review period, due in part to the launch of contactless and NFC-based payments from banks and mobile operators. In February 2011, Airtel Africa launched NFC services in Kenya, Tanzania, Gabon and nine other African countries in partnership with Oberthur Technologies. In a similar move, Google introduced a contactless prepaid card in Kenya in June The Beba card can be loaded with up to KESXX,XXX (US$XXX) to make payments on Nairobi's Citi Hoppa buses. 3.2 Card Fraud Statistics The adoption and acceptance of payment cards in Kenya increased significantly during the review period with the volume of cards growing at a review period CAGR of XX.XX%. In terms of value, the industry grew at a CAGR of XX.XX% during the review period driven by the value of credit and debit card categories that recorded respective CAGRs of XX.XX% and XX.XX%. It is now emerging that despite the growth of the less expensive platforms, companies have not taken measures to protect consumer information. Consequently, credit and ATM cardholders in Kenya are losing cash to people entrusted to serve them in banks. During the review period, the country registered an increase in the volume of card fraud activity. It increased from KESXXX.X million (US$6.7 million) in 2008 to KESX.X billion (US$XX.X million) in 2012, at a CAGR of XX.XX%. Fraud at ATMs remains a key concern for financial institutions and card holders. However, Kenya s financial institutions are tightening measures to fight card fraud. Regional card processor and payments services firm Paynet Group upgraded its card issuing and processing platforms to EMV chips cards. The company has partnered with Family Bank to provide EMV cards, alongside access to their extensive PesaPoint network. Emerging Opportunities in Kenya's Cards and Payments Industry Page 11

12 ANALYSIS OF CARDS AND PAYMENTS MARKET DRIVERS 3.3 Regulatory Framework Regulations pertaining to M-Pesa The success of branchless banking schemes in general and M-Pesa in particular, has driven some regulatory developments. Some of these are based around the view that only a bank should be permitted to offer such services, which suggests that some regulators do not understand how the same regulatory environment can apply to non-bank institutions. To some degree, this view is based on a lack of visibility of, and familiarity with, the capabilities of mobile operators. In Kenya, the Finance Minister launched an audit of M-Pesa, in order to verify that it cannot be used by money launderers and pyramid schemes indeed, the false accusation was made that M-Pesa itself is nothing more than a ponzi scheme. This move was very unpopular amongst ordinary Kenyans, as can be seen from the numerous Kenyan media reports and blogs, which appeared to view it as an attempt by the banks which, the majority of ordinary Kenyans appear to feel, were never interested in providing services to them anyway to shut down M-Pesa. Consult Hyperion were asked to contribute to the response to this audit by carrying out a new audit of security countermeasures and procedures, and we were again able to certify that M-Pesa offers bank-grade security and controls to its customers. At the end of the process, M-Pesa was given a clean bill of health and continues to operate. It is only a matter of time before M-Pesa is brought under the full regulatory umbrella of Kenya s laws, and it is likely to be regulated as an electronic money issuer. This is expected to be some way short of full regulation as a bank after all, M-Pesa doesn t offer credit, and it certainly doesn t lend out (multiples of) its customers funds. Suitability of KYC regulation under M-Pesa KYC requirements are undoubtedly holding back the branchless banking sector. Whilst they are, in some form, absolutely necessary, consideration should be given to whether or not their current application is appropriate. For example, if a consumer sends US$20 once a week to his relatives up-country, is it really necessary that the same consumer undergo the same KYC checks as someone who wants to send $XX,XXX? Perhaps a more limited form of KYC could be applied to the poorest customers up until the time when they reach a certain transaction threshold, at which point full KYC would apply. It is difficult to see, for example, how such a relaxation would increase the risk from terrorist attacks. Emerging Opportunities in Kenya's Cards and Payments Industry Page 12

13 EMERGING CONSUMER ATTITUDES AND TRENDS 4 Emerging Consumer Attitudes and Trends Consumer attitudes and preference play a key role in the success of any product in any industry and so is the case with the Kenya cards and payments industry. Organizations need to be cautious with regards to the demographics they target. Precautions need to be taken when determining consumer expectations. The following section discusses in detail all these factors that can help organizations in the Kenya cards and payments industry to make effective business decisions. 4.1 Market Segmentation and Targeting The Kenyan cards and payments industry developed during the review period, growing at a CAGR of XX.XX% from X.X million cards in 2008, to X.X million cards in The demand for these cards varies significantly based on the demographic targeted. The chart below presents a brief summary of the segments being targeted by the issuers: Figure 3: Kenyan Cards and Payments Industry Segmentation Source: Timetric analysis Timetric Emerging Opportunities in Kenya's Cards and Payments Industry Page 13

14 EMERGING CONSUMER ATTITUDES AND TRENDS 4.2 Consumer Preference Consumer preferences such as price, convenience and associated services play a vital role in decisions over which cards are popular among customers. Notably, the data below shows that, for some cards, consumers prioritize price over services, while price and all other associated costs play a key role in purchasing the majority of debit and prepaid cards in the country. Furthermore, in the corporate segment, price is of high importance when a company is procuring a payroll, travel or entertainment card, while service and convenience are important factors for all types of cards. In the retail sector, price is a deciding factor for all cards except HNWI cards. Figure 4: Kenyan Consumer Preferences by Card Type Source: Timetric analysis Timetric Price Price, and charges associated with cards, play a significant role in the overall purchasing decisions of consumers. Credit card companies are offering a transparent mechanism that clearly reflects the interest charge along with all other fees and charges. Many banks are offering credit cards with minimum joining fees and zero annual maintenance fees. The low costs associated with prepaid and debit cards encourage a large proportion of the population to apply for such products. Debit cards can be acquired when opening a bank account and while some cards have an associated joining fee of KSFX,XXX, the majority of the country s leading banks offer debit cards entirely free of charge. I&MBank Visa debit card come with zero annual fees, while KCB Bank charges a one-time joining fee of KESX,XXX on its Visa based payroll debit card. Emerging Opportunities in Kenya's Cards and Payments Industry Page 14

15 COMPETITIVE LANDSCAPE AND INDUSTRY DYNAMICS 5 Competitive Landscape and Industry Dynamics Although cash may be the dominant payment method, credit transfers, popularly known as the real-time gross settlements (RTGSs), accounted for XX.X% of non-cash retail transactions in 2012, according to data from the central bank. The value of card-based transactions increased from KESXXX.X billion (US$X.X billion) in 2008 to KESXXX.Xbillion (US$X.X billion) in 2012, accounting for X.X% of the total market share of non-cash payments. Visa is Kenya s dominant card scheme with an industry share of XX.X% in volume terms. By bank, the cards and payments industry is controlled by Co-Operative Bank with a market share of 2X.X% Cash transactions Following the automated RTGS system, cash is the second-most popular payment channel in terms of volume in Kenya. The value of cash transaction grew at a CAGR of XX.XX% during the review period from KES1.0 trillion (US$XX.X billion) in 2008 to KESX.X trillion (US$XX.X billion) in Credit transfer The value of transactions settled through RTGSs grew from KESXX.X trillion (US$ XXX.X trillion) trillion in 2008 to KESXX.X trillion (US$XXX.X billion) in 2012, posting a CAGR of X.XX% during the review period Cards payments Card payments emerged as one of the most popular payment methods in Kenya during the review period. The value of card payments registered a CAGR of XX.XX% during the review period growing from KES289.0 billion (US$X.X billion) in 2008 to KESXXX.X billion (US$7.9 billion) in Check payments The value of check payments registered a decline in the Kenyan payment market due to the increasing adoption of RTGS for high volume payments. Consequently, the value of check payment declined at a CAGR of -X.XX% during the review period from KESXXX.X billion (US$X.X billion) in 2008 to KESXXX.X billion (US$X.X billion) in Emerging Opportunities in Kenya's Cards and Payments Industry Page 15

16 MARKET SIZE AND GROWTH POTENTIAL OF PAYMENT CARD INDUSTRY 6 Market Size and Growth Potential of Payment Card Industry The following section contains an overview of the category size and growth potential of the Kenya cards and payments industry. The section is divided into six chapters. Chapter one covers category share analysis by type of card; chapter two discusses the category share and future growth of the overall Kenya card industry by value and volume; chapter three provides the category size of the country s debit card category; chapter four discusses the category size of prepaid cards; chapters five and six cover the category size and growth potential of the charge card and credit card category respectively. 6.1 Market Share Analysis by Type of Card Kenya is the testing ground for a revolution that could help extend financial inclusion to some of the poorest and most remote places in the world. Its m-payments industry is considered to be in the same league as those in Korea and Japan. Despite the popularity of m-payments, debit remains the most-popular payment with a market share of XX.X%. Debit cards recorded remarkable growth during the review period, with cards in issue increasing from X.Xmillion in 2008 to X.X million in 2012, representing a CAGR of XX.XX%. 6.2 Total Market Size and Forecast of Card Industry By volume of cards The volume of cards in Kenya increased significantly during the review period from X.X million cards in 2008 to X.X million cards in 2012, representing a CAGR of XX.XX%. The growth is mainly attributable to the increasing volume of debit cards which registered a CAGR of XX.XX% during the review period, followed by prepaid cards with a review period CAGR of XX.XX%. Driven by the growth in charge, prepaid and credit card categories, the volume of cards in the Kenya cards and payments industry is expected to reach XX.X million cards by the end of 2017, growing at a CAGR of X.XX%. Emerging Opportunities in Kenya's Cards and Payments Industry Page 16

17 COMPANY PROFILE, PRODUCTS AND MARKETING STRATEGIES 7 Company Profiles, Product, and Marketing Strategies 7.1 Kenya Commercial Bank Kenya Commercial Bank Ltd provides corporate and retail banking services. It offers various personal banking products, such as savings and current accounts, personal loans, easy pay loans, salary advances, credit facilities and Biashara banking products. The company also operates the Biashara Club which offers workshops on entrepreneurship and capacity building, networking, business advisory services, and business trips. In addition, it provides corporate banking products, such as custody services, transaction settlements, corporate action administration, activity reporting, trustee and capital and income services Strategies Figure 5: Cards Offered by Kenya Commercial Bank Source: Company website and Timetric analysis Timetric Offering co-branded cards Kenya Commercial Bank, has partnered with the Serena hotel chain to offer co-branded credit cards on the MasterCard platform. Emerging Opportunities in Kenya's Cards and Payments Industry Page 17

18 COMPANY PROFILE, PRODUCTS AND MARKETING STRATEGIES 7.2 Barclays Bank of Kenya Limited Barclays Bank of Kenya Ltd provides a range of banking, financial and related services for local businesses, and small-to-medium-sized enterprises. The company provides a range of consumer banking services comprising savings and transactional accounts, personal and business loans, asset finance and mortgages. It also offers corporate and investment banking services consisting of transactional banking products, which include alliance accounts and collection deposit vouchers, check payments, direct debits, electronic banking, and liquidity management Strategies Figure 6: Cards Offered by Barclays Bank of Kenya Limited Source: Company website and Timetric analysis Timetric Barclaycard offers variable credit limits Barclaycards offers variable credit limits depending on the customer s needs and account type. For example, the credit limit for a normal Visa Gold and Visa Classic differs from the credit limit on the Barclaycard Visa Prestige which is targeted at high net worth clients. Emerging Opportunities in Kenya's Cards and Payments Industry Page 18

19 COMPANY PROFILE, PRODUCTS AND MARKETING STRATEGIES 7.3 Standard Chartered Bank Ltd Standard Chartered Bank Kenya Ltd provides various banking products and services to individuals, small and medium-sized enterprises and corporate customers. It offers deposit products such as current accounts, savings accounts and fixed deposits, personal unsecured loans and mortgages, debit cards and foreign currency debit cards,; excel and mobile banking services, and wealth management services. The company also provides business current accounts, international trade account and business savings accounts. In addition, it offers wholesale banking services comprising cash management, trade services, securities services, and RMB settlements, equities, commodities, foreign exchange, Islamic financing, syndicated loans, bonds and structured products Strategies Figure 7: Cards Offered by Standard Chartered Bank Kenya Source: Company website and Timetric analysis Timetric Emerging Opportunities in Kenya's Cards and Payments Industry Page 19

20 APPENDIX 8 Appendix 8.1 Methodology Timetric s dedicated research and analysis teams consist of experienced professionals with an industry background in marketing, market research, consulting and advanced statistical expertise. Timetric adheres to the Codes of Practice of the Market Research Society ( and the Society of Competitive Intelligence Professionals ( All Timetric databases are continuously updated and revised. 8.1 Contact Us If you have any queries about this report, or would like any further information, please contact info@timetric.com. 8.2 About Timetric Timetric is an independent economic and business research firm that provides critical intelligence on emerging economies and key global industries. The company offers detailed economic and sector intelligence, business insights and independent and authoritative commentary. Underpinning all Timetric s research services is a belief that data if gained following the right technologies and analytic frameworks can provide unique and powerful economic and business insights. The Timetric economic and industry intelligence centers are premium decision tools that provide access to comprehensive research, data and expert analysis. They provide invaluable decision support, presented in an easily digestible format and grounded in rich, proprietary data and data analysis frameworks. Each year, Timetric produces hundreds of high-quality research reports across countries, industries and companies. These reports draw on in-depth primary and secondary research, proprietary data and high-quality modeling and analysis to give its readers a deep insight into global market dynamics and economic trends. Timetric helps its clients to: Gain an unbiased, expert insight from a genuinely independent and trusted source Save time in researching, visualizing and comparing economic and industry data Access the latest and most useful data sets, indices and forecasts Gain access to a unique methodology for understanding economic trends Forecast and predict trends more accurately Emerging Opportunities in Kenya's Cards and Payments Industry Page 20

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