Diners Club Australia, which is owned by Citibank Australia, has teamed with MasterCard to launch the first dual charge card product in Australia. The new Diners Club with World MasterCard, which comes with two cards linked to one account, is a response to the proven popularity of the dual card concept introduced by the major Australian banks and American Express.
This is an interesting move by MasterCard, not just because it is entering the Australian charge card market but because it is partnering with Diners to offer the most exclusive lifestyle program in its product portfolio, World MasterCard, which is positioned one level above the platinum card product range. In Australia, there are only two other card issuers that use World MasterCard, HSBC and Commonwealth Bank, in both cases for credit cards.
This is not the first time the two have formed a partnership. All Diners Club cards issued in the US and Canada can be used at all MasterCard credit card merchant locations worldwide. As of the end of 2011 there were 1.18 million charge card accounts in Australia, a relatively low number in comparison to the more than 13.8 million credit cards in issue. The charge card market is considered a mature market, and the number of accounts has not changed much in the last five years.
The most attractive part of the charge card business is the value of transactions per account, which is the highest out of all payment card types. The average charge card transaction stands at A$296, more than double the average figure for credit cards (A$128). In contrast, debit cards hold the lowest average value per transaction (A$65).
According to Datamonitor's Australian Payment Cards: Review of 2011 and Outlook to 2013 report (April 2012, CM00216-001), average value per transaction for both credit and debit cards has been declining since 2008, while in contrast average transaction value has increased for charge cards. For charge cards, this rise could be interpreted as a combination of the cards being increasingly used for high value purchases, while at the same time being used less often for low value purchases.
High value purchases have always been the key target market for charge cards, and there is high usage of charge cards among business customers. However, issues with merchant acceptance and surcharging may have impacted the sector to the point where growth is limited to niche customer segments and specific retail sectors.
While limited Diners Club acceptance is considered its weak point, the dual card concept is considered an answer to overcome this limitation, by leveraging MasterCard's acceptance network. This will provide new opportunities for Diners Club over the next 12 months, and the product could be pivotal in growing the company's business in Australia.
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