T

he credit card industry expects fewer cards to be issued next year following the implementation of a Bank Indonesia (BI) policy limiting card ownership.

According to Indonesian Credit Card Association (AKKI) general manager Steve Marta, the policy will result in the industry posting around 5 percent growth year-on-year (y-o-y) in terms of card issuance in 2015, lower than the 10 to 11 percent growth recorded in previous years.

The central bank policy, which was issued in 2012 and will come into effect on Jan. 1, 2015, stipulates that people with a monthly income of between Rp 3 million (US$246) and Rp 10 million are only allowed to have a maximum two credit cards.

'€œThere are between 3 million and 4 million credit card holders within that income range. About 450,000 of them currently have more than two credit cards. So, we will see at least 450,000 cards deactivated and most likely fewer new cards will be issued in 2015,'€ he said on Wednesday.

Steve added that the association had begun sending notifications to customers to remind them of the policy. However, if they fail to take action approaching the deadline, credit card issuers themselves will deactivate the cards.

The AKKI has also developed criteria to determine which cards will be discontinued. '€œThe decision will be based on credit quality and activity level. If the two criterion are equal, the final say will be based on length of membership,'€ Steve said.

There are currently 8 million card holders and 15.8 million credit cards circulating in Indonesia issued by 22 banks and one non-banking firm.

AKKI data shows that the top five issuers are private lenders CIMB Niaga, Citibank, Bank Central Asia (BCA) and state lenders Bank Negara Indonesia (BNI) and Bank Mandiri.

Despite the card limitation, Steve said the industry was optimistic that the transaction volume would continue to rise at a double-digit rate, up around 15 percent y-o-y.

The latest statistics from the central bank reveal that total transactions stood at Rp 142.15 trillion as of July. The figure is estimated to reach Rp 256.87 trillion by year-end.

Dodit Wiweko Probojakti, general manager of BNI'€™s product management division in consumer and retail banking, acknowledged that the limitation policy would reduce the number of its credit cards.

'€œSurely we will see a decline in the total number of cards next year from the current 1.7 million as a result of the policy, but what is most important is the way we manage existing customers to minimize the reduction,'€ he said.

According to BNI data, it has around 52,000 customers '€” out of the total 1 million card holders '€” within the Rp 3 to 10 million income bracket. BNI had launched several loyalty programs to maintain the customers'€™ interest in its card, Dodit added.

Meanwhile, CIMB Niaga head of cards and merchant business Bambang Karsono Adi said that the lender had 30,000 customers that would eventually have to make the decision. '€œWe are optimistic that they will stick with us because our card has no annual fee,'€ he said.

By September, CIMB claims to have issued 1.8 million credit cards.

Separately, UOB Indonesia credit card head Budy Setiawan said that the policy would not significantly affect the bank'€™s business due to its focus on high-income customers.

UOB has a total of 300,000 cards and 250,000 card holders as of now, with less than 10 percent of its customers in the Rp 3 to 10 million income bracket, according to Budy.