Hasanah Credit Card (hc) of Bni Syariah in Indonesian Market

BNI Syariah

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1.1 Case Synopsis

On February 2012, Iwa Kustiwa, manager of BNI Syariah, should prepare the new concept of Hasanah Credit Card (HC) of BNI Syariah. As a new product form Sharia Business Unit, he was thinking how to compete with other syariah product in Indonesian market.

The number of cards in circulation at 2009 reached more than 13 million cards issued by 22 banks and financial institutions. Member of the Executive Board of Credit Card Association of Indonesia (AKKI) Dodit W. Probojakti reveals, the volume of credit card transaction in 2009 were approximately 201.75 million transactions. The figure was up 27% compared to the volume of transaction in 2008 that as many as 166.74 million transactions. Growth of the volume of credit card transactions in 2008 were up 44%, compared to the achievement in 2007 that as many as 114.27 million transactions. Dodit said “Growth in the volume of transactions in 2009 was slowed. This was because the global crisis that makes people somewhat resist the urge to shop”. Since 2003 to 2008, the average credit card transaction volume in Indonesia grew 20.7% per year. Aribowo said “The volume average of 456.000 transaction per day”.

Fatwa of National Sharia Council issued the specification of Islamic credit card based on letter number DSN 54/DSN-MUI/X/2006. The Islamic card used at least 3 akad called Kafalah, Qard, and Ijara.

* Kafalah meant a card issuer was the guarator (kafil) to the card holder when they did the transaction with the mercants to pay (Dayn), cash withdrawal from automatic teller machine (ATM).

* Qard meant the card issuer gave clean loan to card holder for all transaction.

* Ijara meant the card issuer charged fee for service as a provider of payment systems.

Year 2009 was a turbulence year for Iwa Kustiwa, he has to initiated the team to start the HC in BNIS. As a head of HC BNIS Program, Iwa Kustiwa, create an assumption as a ground of iBHC which also capture the consumer trend yet fundamental approach towards a complete framework to apply in daily business activity.

HC would be the second Islamic card, after the first card from Bank Danamon Syariah named Dirham Card.

From the branding aspect iBHC, meant:

* Primary / kindness

* Security

* Health agencies

* Quite a treasure

* Family Sakinah (welfare)

* Winning the competition

Strong Benefit of Card features:

* Based on Islamic Ijara margin, create a lighter charge instead of compounding interest of conventional charge.

* Gimmick program for marketing for Umrah package with Installment of 0%, up to 12 months.

* Gimmick program for Entrepreneurship flavour, for transaction of Entrepreneurial program Installment 0%, up to 12 months.

* Automatic payment system of Zakat, Infaq and Endowments.

BNIS HC also take an adventage of Central Bank endorsement with an atricle as follows: “IB Credit Card, such as credit cards in general, could be used to shop at variety of merchants, withdraw cash from ATMs, pay bill, to buy plane ticket and recharge pulse phone”. Since the player was not many like CIMB Syariah, Danamon *(not active) BNIS get the privileges more than others. HC already comply with the provisions of the Islamic Sharia Council of National No. 54/DSN-MUI/X/2005, using contract Kafala – Qardh – and Ijarah, so the cost accounting system more transparent, equitable and less expensive than the cost calculation system on a conventional credit card.

The fundamental difference between a conventional credit card with a credit card sharia HC:

1. * In a conventional credit card, interest expense and other cost (such as cost of late fees, ect.) incurred for the month, will be accumulated with the remaining unpaid principal outstanding after the due date, to calculate interest expense in the next month, so it was known system with high interest rates (compounding interest).

* In the Islamic credit card HC, the system cost calculation Monthly Fee (cost of debt management –ujroh (Fee) equivalent 2.95%) was calculated based on the remaining debt net base after the due date, so the cost incurred in the previous month with the rest of the debt was not accumulated principal for calculate the cost of the following month.

1. * Pull system in the ATM Cash (Cash Advance) in a convetional credit card, would be charged as follows:* Charged withdrawals of 4-10% of the total nominal drawn, depending on the card issuing bank, at least Rp, 50.000

* While HC, the transaction does not distinguish between retail and cash advance transactions, as was seen only billing statement total remaining unpaid after the due date only.

With tag line “Sharia-complaint transaction wise inspiration” BNIS, deliver tag line from Vision and Mission of BNI Syariah, which was “InsyaAllah (Wishing) you a great fortunes” with focus

HC BNIS saw that existing market, views that healthy credit card industry is expected to reduce the risk of non-performing loans as a function cards used as a credit debt. HC BNIS promotes flavor of Entrepreneurship, Education and of course Islamic thematic like Umrah and Zakat payment into the card features. Back to HC through strategic alliances BNIS create non-mainstream concept of small-medium business franchise as a card features. Working with several franchise holder, BNIS set up franchise opportunities for HC cardholder to start a business, where the initial cost (purchase franchise rights) hasanah be debited from the card and can be repaid over 12 months, with no additional charge.

HC BNIS identifying and maximizing the potential derived from the values, which is Education. Similar like product of personal credit in banks that can be use for renovation, vacation, and other personal use, HC BNIS try yo utilize it into ‘home stay/boot camp’ approach for kids and teenager to learn in England-UK. BNIS developing collaboravite partnerships between those Universities who develop strategic initiatives program home stay at UK to bridge the world of education as the cornerstone of the UK and Indonesia ties. Besides could be used for groceries, HC could also be used for the financing of franchise, Education Program at London and Umrah to Mekkah. Related