MasterCard introduced by ninety-two local banks simultaneously

Lokale Pengeinstitutter (Local Banks) is an association of 122 local banks, savings banks and cooperative savings banks in Denmark, the Faeroe Islands and Greenland. Economies of scale and tight logistics made it possible for 92 local banks to launch the LP-MasterCard at the same time.

LP-MasterCard is a new joint credit cardconcept developed by Lokale Pengeinstitutter for its members. It is not the association but each individual local bank that issues the MasterCard. They also deal with all customer contacts, and set prices and terms for their own customers.

Economies of scale
“If every individual bank were to develop its own MasterCard, it would be extremely expensive for our members compared to the price available to us as an association acting on behalf of our 122 members,” says Rasmus Poulsen, who is Card Manager at Lokale Pengeinstitutter. He tells us that joining the MasterCard partnership is vol-untary. “Extremely small banks will see little business potential in MasterCard, and therefore some of the very smallest have declined and are sticking to the Visa/Dankort card and Visa Electron. On the other hand, the 92 members who have joined the scheme represent more than 98% of the total balance, so we can truthfully say that we have had almost complete backing for our system.”

Tight management with a finger on the pulse
When Lokale Pengeinstitutter decided that its members should issue MasterCard, a card organisation was set up to man-age the work and infrastructure and the overall agreements with PBS pay-ment systems, XPonCard and others. The card organisation also decides on which products and services should be offered as part of the LP-MasterCard concept. Actual sales work was delegated to the local banks, which are in direct contact with their customers.
“Lokale Pengeinstitutter largely focuses on the benefits to be obtained from close partnership on the supply side combined with the strong distribution power of the individual banks in their local areas. The collaboration on Totalkredit, which has now been sold to Nykredit, is a good example of the financial success provided by this concept. The establishment of the MasterCard partnership is based on pre-cisely the same philosophy,” says Rasmus Poulsen.

Common design with individual names
With 92 members in the partnership it was extremely important to Lokale Pengeinstitutter that the card concept should be as standardised as possible.
“We determined the card design and its limits of use, not least to obtain econo-mies of scale when it comes to marketing. Therefore, among other things, we have been able to set up a joint customer-oriented website, which describes the various types of cards (www.lpmaster-card.dk).”
However, for members it is important that the name and logo of their bank appear on the front of the card so as not to lose the relationship between card, cus-tomer and bank. The common card design of the LP-MasterCard enables members to enjoy these options.

XPonCard’s smart card expertise crucial
Rasmus Poulsen says that the choice of XPonCard as card supplier was not a difficult one. “They were the only peo-ple who could supply a chip-based card system which satisfied our wishes and requirements. As six different cards for 92 different members are involved, it is a task that makes great demands on XPonCard’s logistics and control. Things have gone smoothly so far,” Rasmus Poulsen says in conclusion.

Lokale Pengeinstitutter – in brief
In total its membership operates some 850 branches and employs 9,500 people. At the end of 2005, its members had issued over 23% of the banking sector’s almost 3.5 million Dankort and Visa/Dankort cards.