KTC turns to promotions to boost use of govt service credit card

The company expects to increase spending through this channel to Bt1 billion within three years.

Ratana Cholprypimolrat, executive vice president of KTC, said the company now offered the credit card to 67 government departments out of a total of 145.

The card was launched in order to facilitate transactions for government units and the business sector. The business sector does not need to wait for 30 to 90 days in terms of the billing process, but they can receive money immediately when the card is used - while the government fully receives the due tax.

"According to the rules of the ComptrollerGeneral Department, government units can use the credit card for only three purposes: travel, seminars and exhibitions, and receptions for foreigners.

"There is about Bt5 billion each year that could be spent through the credit card, but their spending through the channel is less than Bt1 billion. There is therefore vast room to expand the business. The company expects to boost spending volume to Bt1 billion in the next three years," said Ratana.

KTC took over this business segment from Krung Thai Bank in January.

It has surveyed the spending features of each government unit and is launching promotions to meet their needs.

In the first quarter, spending increased to Bt20 million - a 100percent rise from the same period last year. The firm expects Bt500 million in spending by year-end.

"When spending via the credit card to buy air tickets, the company offers Bt4 million in accident insurance for each traveller. However, the maximum spending is limited at Bt100 million per transaction.

"Besides, if buying air tickets via the card is Bt40,000 and Bt20,000 per person, the former receives a travel kit worth Bt500 and the latter a gift voucher from Starbucks worth Bt200," said Ratana.

A Bt3,000-gift voucher from Leam Chareon Seafood and MK Restaurant is offered when paying for local seminars. There is no minimum spending requirement.

Moreover, the three highest government spenders will receive a free trip to attend the Government Credit Card System Development Seminar in Europe.

There are three other creditcard issuers in the government unit segment: Bangkok Bank (BBL), serving 36 departments; TMB Bank, serving five departments; and Siam City Bank, serving three.

KTC, BBL and TMB's grace periods for the government service credit card are 45, 55 and 50 days, respectively.

In the event of late payment, KTC charges 1.5 per cent of the overdue amount, while BBL and TMB charge 20 per cent per annum.

Ratana said the behaviour of government officials, many of whom still prefer cash, was the major stumbling block for spending growth. Therefore, the company needs to send staff into the field to explain the benefits of using credit cards instead of cash.

BBL also offers free accident insurance amounting to Bt4 million for its cardholders whose air tickets are paid for using the card, and Bt1.5 million in accident insurance for other travellers.

TMB offers Bt3-million accident insurance, but only for cardholders.