With Barclaycard's return to SA after a 16-year furlough, the credit card market is getting its first taste of foreign competition since the 1980s and it promises to be an interesting battle.
It was only a matter of time before one of the world's largest card issuers eyed the rich returns being harvested by the domestic card companies.
When international banks started returning to SA in 1994, their preferred route of entry was to buy a stockbroking firm and use it as a launching pad into the more lucrative investment banking market.
They confined themselves to the corporate market, steering clear of the retail market - until now.
Close on the heels of Barclaycard's re-entry, Standard Chartered announced it had bought online bank 20twenty from the remains of Saambou and planned to relaunch it in the next few months.
In August 2003 Barclaycard formed an alliance with Standard Bank and took over its bluebean card, giving it a running start with 100 000 active customers. It also acquired Standard Bank's Kaizer Chiefs and Orlando Pirates cards, aimed at the emerging market where sports affiliation appears to be a powerful route to success.
Barclaycard has since launched two more products under its own brand: Barclaycard Gold and The Manchester United card (Barclaycard sponsors the UK football Premiership).
Barclaycard has 120 000 card customers in SA and plans to grow this to 200 000 by year-end. Its business plan includes a target of 8% of the SA card market by 2010, most of which it expects to come from new growth rather than competitors.
Barclaycard SA MD Barry Fergus is regarded as a legend in this market. He officially retired as Barclaycard International MD last year after 32 years with the group, but was immediately offered the opportunity to lead the joint venture (JV) in SA.
What attracted him to this relatively minor posting after heading one of the biggest card companies in the world?
"I retired from Barclaycard International in December, having completed five years as MD. Just as this was happening, I was offered this opportunity to come to SA and get Barclaycard established here. I spent time in SA in the 1980s and loved it. I always wanted to come back. I was particularly attracted to the challenge of developing a new business virtually from scratch in a market where there is great potential for credit cards - the time to concentrate on one market is really enjoyable after always worrying about more than 60 markets in my previous role," says Fergus.
Standard Bank distribution and card services director Craig Bond says: "Barry was already a legend in the card market more than a decade ago. We used to travel abroad to hear him talk at conferences on the latest developments in the market, such as fraud detection techniques and new product developments. It is a coup to have him in SA."
Earlier in his career, Fergus was instrumental in developing the credit-scoring system and fraud-detection methods now commonly used by card companies throughout the world.
Barclaycard is the largest card issuer in the UK and dominates many of the overseas markets in which it operates. There are about 9m people with Barclaycards in the UK, where one in five cards is a Barclaycard.
The group is particularly noted for its rigorous credit-management systems, which turned it into one of the world's most successful card companies in terms of customer acquisition, retention and bad-debt control.
This, and the "cultural fit", is what attracted Standard Bank to Barclaycard, says Bond.
The alliance has raised eyebrows in the market, not least because Barclaycard has taken up residence in Standard Bank's card division premises in Johannesburg.
Standard Bank and Barclaycard will compete against each other in the card market, but will share intellectual capital, IT and other systems. In terms of the JV agreement, Standard Bank will provide all processing for Barclaycard. In return, Barclaycard will handle card processing for Standard Bank elsewhere in Africa.
Is Standard Bank not cannibalising its own market through this JV with Barclaycard?
"No, we both see this as a growth market and we both want to take card products to the unbanked, which is where Barclaycard's experience in countries such as Kenya will prove invaluable to us," says Bond.
"Standard Bank is the leader in the SA card market and we've grown our market share to 28,8% from 19% a few years ago. We decided we needed to take our card business to a new level, and we needed fresh ideas. We talked to the biggest card companies in the world, and we knew of Barclaycard's international success, particularly in areas such as business origination and credit scoring."
Fergus agrees: "Our aim is not to carve up the existing market, but to grow it. But make no mistake, we will be competitive. We think there are about 12m people who qualify for cards in SA, based on earnings of R3 000/month. But there are only 3m people who hold credit cards in SA, which is a quarter of the potential market."
