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. Last Updated: 07/27/2016

Bank Offers Credit Card With Services for Drivers




In what might mark the beginning of a new marketing trend on the Russian credit card market, Alfa Bank has announced that it is offering customers a co-branded credit card combining the functions of a traditional card with an automobile service package.


The Alfamobile Visa card works like a normal credit card, but it also gives customers free roadside service in and around Moscow, St. Petersburg, and Nizhny Novgorod. It also offers access to free legal consulting for roadside incidents, discounts on insurance offered by RESO-Garantia, the bank's marketing partner, and a 10 percent discount on car repair bills at authorized centers.


The Alfamobile card costs $20 to open and has a $60 annual fee, while a regular Alfa Bank Visa card is $10 with a $20 annual fee.


Alfa Bank officials said the extra services warranted the higher costs.


The bank said that market research begun in the spring of this year showed that automobile service would be a popular niche for a co-branded credit card.


"Over 50 percent of our credit card clients have cars, so it was natural to expect that a car-service option would interest them," said one of the officials involved in the card program who asked not to be identified.


Other Russian banks could soon follow Alfa's lead, industry experts said.


"All the banks have been talking about doing this for a long time, so I think other similar programs by other banks are in the offing," said Vadim Bakhtov, a spokesman for the Russian Association of Europay Banks. Europay services MasterCard transactions.


Industry insiders said that co-branding was first introduced in the West 20 years ago, but has only become widely popular in the last decade as banks seek to differentiate their credit cards from those offered by competitors.


However, John Berns, a senior marketing official of Visa International, said that the motivations for promoting co-branding on the underdeveloped Russian card market are different from those in the West.


"In Russia today, you still have a large portion of the population that is not carrying a payment card at all," he said. "One of the primary objectives of Visa is to help the banks reach critical mass, and that means getting better penetration into everyday people having the card."


The Russian credit card market suffered severely from the August crisis.


Co-branding credit cards may serve as a way of drawing wary customers back, some analysts said.


"Russians don't want to put their money into a bank," said Richard Hainsworth of Thomson BankWatch, a rating agency. "Banks may be thinking that if they offer credit cards with some added utility, that this will help bring people back into the banking system."