BANKING B

CREDIT CARDS IN ECUADOR

NAME:

MICHAEL GARZN

Professor: JORGE GALLARDO

2014 2015

INDEX

INTRODUCTION........................................................................... 3
CREDIT CARDS IN ECUADOR ........................................................ 3
TYPES OF CREDIT CARD ISSUERS IN ECUADOR ............................. 4
INTERDIN .......................................................................................5
PACIFICARD ....................................................................................8
FINANCIAL SITUATION OF CREDIT CARD ISSUERS ........................10

INTRODUCTION
In the late 1800s, people used to trade goods through the concept of credit, using
credit coins and charge plates as currency. It had to pass 50 years for the use of
the plastic payments and see how they turned into a way of life.
In the early 1900s, oil companies and department stories issued their own
proprietary cards, according to Stan Sienkiewicz, in a paper for the Philadelphia
Federal Reserve entitled "Credit Cards and Payment Efficiency."
The first bank card, named "Charg-It," was introduced in 1946 by John Biggins, a
banker in Brooklyn, according to MasterCard. When a customer used it for a
purchase, the bill was forwarded to Biggins' bank.
The Diners Club Card was the next step in credit cards. According to a
representative from Diners Club, the story began in 1949 when a man named
Frank McNamara had a business dinner in New York's Major's Cabin Grill.

CREDIT CARDS IN ECUADOR

There are several versions of which was the first credit card issued in Ecuador.
Credit cards in Ecuador began in the 1970s, during the oil boom of the country
which generated a consumer economy. The first credit card in Ecuador was issued
by Diners Club Ecuador, with a national and international service.
Diners Club of Ecuador was founded in 1968 as a limited company, and became a
finance corporation in 1997. Their current principal activities are to issue, manage
and promote the franchise of Diners Club International and for the 2005 they had

about 120,000 members and more than 15,000 commercial establishments

affiliated.
Also according to the historical information from Pacificard S.A., 32 years ago a
group of investors jointly with the Banco del Pacifico created the first company
issuing and administering credit cards in Ecuador, called Unicredit. After 14 years
they changed the name to MasterCard del Ecuador. In the 2003, this company also
adopts the Visa Credit Card and changed their image to Pacificard S.A. and for the
last 8 years this company had generated purchases and withdrawals of about
4,200 million dollars in more than 30.000 establishments.

TYPES OF CREDIT CARD ISSUERS IN ECUADOR

Currently in Ecuador exists to types of credit card issuers: Interdin and Pacificard,
these two companies for the 2014 had around of 24 million credit cards circulating
in the market.
The credit card issuers have to accomplish some requirements in order to start
their functions in the market, they need to present some documents to the
SuperIntendencia de Bancos y Seguros like:

Draft of the contract that will be held with commercial establishments.

Credit Card formats, charge, affinity, affinity of system close and system
close.

Debit memos format for the acquisition of goods and services, that will be
used by the commercial establishments affiliated

Format of the Statements.

Minimum payment capital of $1,314,470 dollars. And a minimun Constituted

Technical Equity of $3.943.410.

INTERDIN
Interdin, is the leading credit card operator in Ecuador, which together with
important institutions in the market like: Diners Club and Banco del Pichincha,
applied their philosophy of marketing, sell and serve in a unique way, attending to
their cardholders and always guiding under the scheme of winning value for the
customers.
Interdin offers two types of credit cards: Diners Club and Visa Titanium.
The utility of Interdin for the 2014 was of $719.036 (75,38%) of the market that in
comparison with the 2013 this was reduce by 5,44%.
The Diners Club Credit Card offers different types of credit card services like:

Personal Credit Cards

Additional Personal Credit Cards

Contract Credit Cards

Corporate Credit Cards

Additional Corporate Credit Cards

The Requirements for the application of credit cards are:

ID copy.

Copy of vehicle registration.

Copy of receipts from the property tax payments.

Income Certificate indicating the position, time and income. (30 day).

Certificate of Bank movements.

Personal Photo.

Copy of RUC and Municipal Patent.

Copy of two Commercial Certifies.

Statement of Income tax (3 previous months).

Certificate of Bank Movements.

Also Diners Club offers electronic services in order to protect the credit card users
like:

Virtual Account statement.

Security advices.

Block of cards

Double authentication demo

User and passport

Online services.

Payclub

Payclub express

Diners Box

Diners club also offers financial services like:

Immediate Credit

Investment and Save.

Financing

Payment facilities

Types of Credit

SHAREHOLDERS

PACIFICARD

PacifiCard S.A. offers its customers a number of options credit cards and prepaid
Visa and MasterCard. Among the MasterCard and Visa are the following products:

MasterCard Black

MasterCard Platinum

MasterCard Gold

MasterCard Clsica

MasterCard para Ti plus

MasterCard MileagePlus

MasterCard Business Card

MasterCard de Afinidad y Marcas Compartidas

MasterCard Garantizada (Clsica)

MasterCard Aldeas S.O.S

MasterCard para Ti

MasterCard Mi Comisariato

MasterCard Cinemark (Clsica)

MasterCard Monte Sina

Visa Infinite

Visa Platinum

Visa Oro

Visa Clsica

Visa Nacional Cash

Visa para Ti

Visa MileagePlus

Visa Corporativa

Visa Afinidad y Marcas Compartidas

Visa Mi Comisariato

The Requirements for the application of Pacificard credit cards are:

Copy of ID.

Credit application approved.

Vote certificate from the last election period

Labor Certificate detailing income or payroll

Expense Detail form.

FINANCIAL SITUATION OF CREDIT CARD ISSUERS

According to the Central Bank of Ecuador at the end of 2014, the money that was
circulating by the operations of credits cards was about the 42% of the money
circulating in the country. These quantities of credit cards circulating money have
been increasing from the 2010 where the country move around 10400 million
dollars and in the 2014 move around the 19000 million dollars.
The use of credit cards is a good business in the Ecuadorian market because even
that the 42% of the money is circulating in the plastic cards, consumers prefer to
use the credit cards because of the way of how these institutions brain wash their
mains giving people credit cards because of their account movements, or the day
by day phone calls. If we compare the financial loans of a bank that is around the
11% and 17% and the interest of the credit cards that could reach the 32% when
the credit card holder doesnt pay the 100% of the total monthly consumption and
paid only the minimum. So in this case for banks is better to loan money by credit
cards because they can reach until the double of the interest, and user look the
advantage of use the credit cards because they can split the payments.
Even this method of financing is very difficult to understand and it exists a lot of
debtors in the credit card market, it only exists 4% of late payments.

10

In January 2015, the companys issuers of credit cards Interdin and Pacificard S.A.
obtain profits around the $954.036. Interdin obtain profits of $719.036 (75,38%)
and Pacificard $235.000 (24,62%)
According to the Central Bank of Ecuador, the amount that have to be pay by the
credit card holders is about $789.91 per month, this is about 10% higher from the
last year. And it have been registered 368.039 transactions by credit cards.

ASSETS
INVESTMENT
CREDITS
LIABILITIES
ACCOUNTS PAYABLE
EQUITY
SOCIAL CAPITAL

PACIFICARD S.A.
$ 247.804.257,00
$ 26.179.260,00
$ 158.589.578,00
$ 159.976.401,00
$ 74.776.860,00
$ 87.110.177,00
$ 89.810.361,00

# Credit Card Holders

# Establishments
# Employees
# Shareholders

SOLVENCY
ROA
ROE
M

$
$
$
$
$
$
$

INTERDIN S.A.
124.652.175,72
2.785.412,84
83.984.373,98
76.993.944,06
67.724.567,18
47.658.231,66
23.600.000,00

494801
32743
684
12065
PACIFICARD
S.A.
INTERDIN S.A.
18,54%
16,70%
3,42%
1,49%
10,84%
7,32%
3,28%
4,86%

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