The Hindu Business Line : HSBC to tap card venture to extend `merchant loans'

The Hongkong and Shanghai Banking Corporation Ltd's recently-formed joint venture, Global Payments Asia-Pacific, will help the bank's India operations in getting more merchant establishments - such as shops and restaurants - to use the bank's machines for swiping credit cards.

Firmed up in July, the joint venture with Global Payments, a player in payment processing services, will enable HSBC India in `merchant acquisition'. However, HSBC's eye is not just on the fee that it will get from the shop-owners when they swipe a credit card on the machine provided by the joint venture.

The bigger idea is to look for lending opportunities with the merchants. For, HSBC has a product which it calls `merchant loan'— loan given to a merchant equivalent to (say) 65 per cent of his projected sales through credit cards, Mr Subir Mehra, Head-Commercial Banking-India, told a press conference here on Monday.

Recent product

Today, about 16,000 merchants use HSBC machines at their establishments to swipe credit cards. The `merchant loan' product was recently introduced and the bank has about 400 merchants who use the product (borrow against their credit card dues), Mr Mehra told Business Line.

The bank expects the product to help in its SME thrust in India, and complement other small-business products such as channel financing, trade financing and factoring services.

Mr Mehra said that the bank had around 40,000 SME customers and was adding about 400 customers a month to the list. This growth has been possible essentially because of `customer relations managers' the bank has for SMEs. Today, HSBC India has around 230 CRMs, against less than 10in mid-2004, Mr Mehra said.

Targetting SMEs

At the press conference, HSBC officials spoke of a "global campaign" aimed at making customers aware of HSBC's product suite for SMEs. The `campaign' would start in India too in a few weeks, Ms Margaret Leung, Group General Manager, Global Co-Head-Commercial Banking, HSBC, said.

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