Reg Rumney looks into the new plastic=20 money that promises to help you buy a car
The advantage to South African motor car company Nissan in=20 launching its ”Nissan card” seems obvious: card users are=20 locked into buying a Nissan vehicle as their next new car.=20
Would-be Nissan owners get a form of added value from the=20 motor company because the card provides a point of=20 differentiation from other motor manufacturers.
The bank that finances the card, niche bank Unibank, has=20 its existing credit and charge-card base expanded by=20 Nissan’s marketing campaign and gets a new source of income=20 from interest on the outstanding balances of a whole lot of=20 new cards.
The card is part of — but not the same as — a whole new=20 wave of plastic money, such as the Woolworths and Pick ‘n=20 Pay cards, aiming to create customer loyalty.
The way the Nissan card works is that five percent of every=20 purchase made with a Nissan Card — except for fuel and=20 airfares — is put towards the purchase of a new Nissan or=20 Uno in ”Nissan Rands”.
Five percent of all cash advances are earned as Nissan=20 Rands, and five percent of debit balances transferred from=20 other credit cards too.
As with private label credit cards, like the Woolworths=20 Card, the financing will be handled by a bank, in this case=20
Unlike the private cards, the Nissan Card is a ”real”=20 credit card, albeit one not backed by the world’s two=20 giants, Mastercard and Visa. So Nissan card users have=20 access only to South African merchants who have signed up=20 with Unibank. In all other ways it appears to operate as=20 any other credit card would.
The Nissan card is similar to Unibank’s Bonus Card, where=20 card holders get five percent of the value of their yearly=20 purchases back as a cash bonus at the end of the year.=20 Unibank, with First National and Fedlife as major=20 shareholders (25 percent each), says it has 300 000=20 existing credit cards in issue, and branches nationwide.
Nissan Marketing managing director Stefanus Loubser says=20 that close to 6 000 have signed up and an aggressive=20 campaign is on the go to sign up more.
The interest rate on outstanding balances is comparable to=20 other credit cards, but the annual cost at R36 is lower.=20 Loubser says General Motors (GM) does the same in the=20 United States, also putting five percent aside for the=20 customer to buy a new GM vehicle.
The five percent of the purchase price that becomes ”Nissan=20 rands” and goes towards the purchase of a new Nissan by the=20 customer normally goes to the bank, says Loubser. With most=20 other credit cards the percentage can vary from a couple of=20 percent to more than five percent.
How Nissan does this Loubser doesn’t want to say. ”That’s=20 our secret.” Probably, the five percent is financed partly=20 by the merchant, partly by Nissan and partly by Unibank.
What’s in it for the consumer?
The amount a cardholder can save towards his new car may=20 seem limited. By Nissan’s own calculations, monthly card=20 spending of R1 000 earns R50 a month, or=20
R3 000 over five years. This means the cardholder will have=20 saved the full deposit on an Uno, or R3 600, after six=20 years. This is as long as the price of the Uno stays the=20 same, and doesn’t follow the seemingly endless upward=20 spiral of car prices that South Africa has seen over the=20 last decade.
Nissan points out Nissan rands can be pooled by multiple=20 card holders, for example, from various family members each=20 with Nissan cards. The cost of the main card is R36, but=20 supplementary cards cost R18.
There is no expiry or limit on the accumulation of the=20 Nissan rands, and non-family members can also pool Nissan=20 rands,as long as they are more than 42 months old. This=20 allows people to sell, swap, donate or bequeath their=20 Nissan rands. The arrangement allows for stokvels or=20 stokvel-type arrangements to buy Nissan vehicles.
It is early days yet, but response to the ”co-branded” card=20 indicates a fair number of consumers think the card a good=20 deal — or they are desperate for a Nissan vehicle or=20 credit or both. Loubser says that after the first ad was=20 flighted on television last Saturday night, 650 enquiries=20 were received, 700 were received after the second flighting=20 on Sunday, and there have been around 1 000 calls every=20 time the ad has been flighted since. It is understood=20 Unibank has received more than 15 000 applications.