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Merchant banking: Equity eyes more merchants for card business

By Jackson Okoth | July 23rd 2014
By Jackson Okoth | July 23rd 2014
Equity Bank Chief Executive Officer Dr James Mwangi.

Equity Bank is recruiting vendors to pave way for regional acceptance of its American Express Cards among other payment solutions offered by the bank.

This is through a process known as merchant acquisition, providing alternative revenue streams for its business partners, who will enjoy commissions for card transactions.

In a typical card business model, whether one uses a debit, credit or prepaid card, a merchant discount is paid to the card company.

A merchant is where the point of sale device has been placed by the card company. The merchant commission is paid for the convenience of not having to deal with cash and the risks associated with it.
Equity Bank recently sealed an operating deal with American Express, the world’s largest credit card company in terms of purchased volumes.

The partnership affords Equity the rare opportunity to serve American Express Card Members visiting East Africa from anywhere in the world.

Currently, American Express holds a portfolio of more than 107.2 million cards in force worldwide with $33 billion annual revenues.

“At Equity Bank, our commitment is to best serve and meet the financial needs of our nearly nine million customers.

Our association with the world’s largest credit card companies and payment solution providers is therefore part of this commitment to deliver the best card solutions,” explained Dr James Mwangi, Chief Executive Officer, Equity Group.

The bank is now a partner for American Express, Visa, MasterCard, PayPal, Google, China Union Pay, SWIFT, JCB, VFX (Equity Direct) and Diners Club. Whenever one uses an automated teller machine, a fee is charged for the transaction.

The fee charged is shared between the automated teller machine owner, network and card issuer, just like the usage of cards at points of sale.

Among the recent merchants retained by Equity Bank to support the American Express card business include retailers Nakumatt Holdings, hospitality outlets ArtCaffé, Heritage Hotels, Best Western Hotel, Imperial Hotel, Laico Regency, Leopard Beach Resort and Boma Hotels.

The partnerships are also in line with Equity’s 3.0 business strategy of becoming a one stop shop for financial services, and giving its customers the freedom of modern banking in today’s fast-paced world.

Equity Bank is currently enjoying a market leadership slot for diaspora remittances with approximately 16.8 per cent market share.

Last year,over $185 million from the Diaspora is estimated to have been channeled into the country through the bank.

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