Each company can customise the benefits associated with their retail card. These usually include loan-ability, rewards and discounts. This incentivises the customers to not only start using retail cards, but also to return to the same brand as they can accumulate awards with each purchase made.
However, many retail stores in South Africa, online and off, have yet to catch up with the trends in the United States. This is due to the credit risk associated with all credit card providers. According to Neil Roets, CEO of the debt counselling firm, Debt Rescue, many consumers in South Africa are reaching out for debt counselling a little too late.
In addition to this, the use of in-store credit cards in South Africa
has increased from 15.2% last year to 20.8% this year. Therefore, it has become crucial for local brands, hoping to benefit from their own retail cards, to ensure a low credit risk for each card-bearing customer.
Fortunately, with the rise of data analytics and solutions, retail stores can use the data they have to rank customers by predicted credit risk. In this way, brands can confidently offer their retail credit card to consumers with a low credit risk score.
OLSPS Analytics is a company which offers a Scorecard Solution
software to retail stores. The company leverages the retail store data, already available, to create a profile for each customer based on their individual credit history and recent purchase behaviours.
In this way, the model optimises the decision-making for the retail store by identifying favourable credit applicants. The retail store can avoid, potentially resource-heavy, data cleaning and analysis by using an external company which specialises in building these models.
By utilising a data-backed credit card solution, retail stores in South Africa are able to increase customer loyalty by offering this in-demand financial service. According to the State of Credit survey conducted by Experian in 2017, consumers in the United States hold an average of 1.51 retail credit cards. South African stores which adopt the retail card early could be filling the gap in our market and the risk in doing so is heavily mitigated when using a credit risk model, such as OLSPS Analytics' Scorecard Solution.