Arriva Card a Has Lone Seat At Casino Cash-Advance Table

  Many consumer segments have card products available that support their lifestyles and financial needs. Business travelers, for example, can get a travel-and-entertainment card.
  But while there are many T&E cards from which to choose, there is only one casino cash-advance credit card.
  The 16-month-old Arriva card, a private-label product that offers gamblers cash advances with lower fees than traditional credit cards, has been making steady headway in the casino market. Some 860 casinos in the United States and the Caribbean accept the Arriva card for cash advances at Global Cash Access Holdings Inc.-operated ATMs and windows where casino patrons can get loans and cash in their winnings. Harrah's, Caesars and Bally's casinos are among the customers of Global's Arriva Card Inc. subsidiary for cash-advance services and processing.
  In February, Global Cash Access reported that Arriva cardholders were using the card for 40% of their casino credit card transactions. The company reported in May that the Arriva card has advanced more than $40 million of credit to cardholders since August 2006. It reported in 2006 that, four months after the Arriva card's launch, the card was used to obtain $2.5 million in cash and showed a greater than 1.36% direct-mail response rate among high-quality, credit-worthy customers.
  In 2006, Global put $19 billion into the hands of casino patrons, primarily through its more than 1,500 casino ATMs, and processed nearly 85 million transactions.
  Global Cash Access' expertise in the gambling market is the driving force behind making the Arriva card work. "We do so many of these cash-advance transactions each year that we saw the opportunity to come out with our own credit card but with better terms than existing cards," says Todd Smith, Global Cash Access senior vice president of marketing.
  Arriva card takes on the cash-advance function of other credit cards but offers a decidedly better deal, the company contends.
  The Arriva card has a 25-day grace period before interest is charged on an account. Annual interest rates applied to unpaid balances range from 15% to 24%, a range common with many other card products. But while most traditional credit cards only allow cardholders to get cash advances based on a percentage of their available credit, Arriva Card allows advances for 100% of available credit, says Smith.
  The Arriva program also gives reward points for making cash advances, while most, if not all, credit cards never offer points for cash advances. Cardholders also may pay from 25% to 50% less in service fees than those casinos impose for cash advances at certain ATMs and windows. The reduced fees are available at more than 50 casinos across the country.
  Industry observers say Arriva card is unusual because it is the only one specifically made for casino patrons. "It's a neat card," says Gwenn Bézard, research director at Boston-based Aite Group. "The cash-advance capability versus what you can get with a typical credit card is a significant advantage."
  But there is a catch, as not everyone can get an Arriva card. Cardholders must be "good" gamblers, that is, individuals with decent credit and strong financial histories.
  According to casino giant Harrah's 2004 survey profiling the American casino gambler, gamblers generally are more likely than nongamblers are to have a ariety of common investments, including savings accounts, life insurance, mutual funds, stocks and bonds.
  In terms of financial spending, they generally are more active than nongamblers are, including how often they buy new cars and buy or sell investment products such as stocks and bonds. Gamblers also tend to be more astute with their credit card management, as 43% of those surveyed always pay their entire balance compared with 41% of nongamblers who do so.
  RISK MANAGEMENT
  The fact that the Arriva card works in a closed-loop, private-label casino environment allows Arriva Card to manage risk better than most card issuers can. "They know the business very well, and they already know the customers of casinos in a more sophisticated way," says Bézard.
  Bézard likens the Arriva Card program to private-label retailer card issuers that have extensive customer data that enable them to make targeted offers and rewards to their best customers.
  Smith agrees. "We're serving people in our database, and we do a better job at underwriting people that do cash advances because we see their behavior again and again," he says. "We're not giving large amounts of credit to people who we don't see having done these transactions."
  CIT Bank of Salt Lake City, which issues the Arriva card, viewed Global's expertise with casino customers as a plus for supporting the program. "Global Cash Access has a leading presence in the casino segment and, based on the data they had, it was a good strategic fit," says Jason Lloyd, senior vice president of business development for CIT's consumer financial services strategies division.
  Arriva Card claims to increase gaming revenue by putting more cash on the floor at no risk to the casino, though Global's casino partners declined to comment on their participation in the program.
  Under Arriva Card's rewards program, cardholders receive two points per dollar advanced at participating casinos. Rewards include getting cash back for points that cardholders can withdraw at ATMs, says Smith. Cardholders also can redeem points for such goods and services as travel, electronics and apparel. Perks include luxury travel and accommodations, and VIP access to shows and events.
  Arriva Card's Web site provides plenty of information about the card, but Smith says the company does not plan to conduct extensive card marketing. Indeed, Arriva Card does almost no advertising but instead relies on signage on its ATMs and direct mail to its database of cash-advance customers, he says.
  "We want to make sure we understand the customer's behavior and evaluate the underwriting," Smith says.
  Casinos that accept the cards offer perks for usage. For example, 35 Harrah's locations are offering 25% off the cost of service fees for Arriva card cash advances. Also, at the Pechanga Resort & Casino in Temecula, Calif., cardholders can get free deluxe accommodation for one night when they secure a cash advance of $5,000.
  Along with casinos' exclusive deals for cardholders, Arriva continues to beef up its offerings. In July the company signed a joint marketing agreement with Striker VIP Inc., a Las Vegas-based concierge and event-services provider, to offer such luxury concierge services as VIP event access, transportation, dining and spa services to Arriva cardholders.
  Arriva Card also started a sales-marketing effort, called the Bounty Program, that rewards casino partners for signing up new Arriva card customers. Casinos receive an undisclosed cash reward for each new Arriva account if the application comes from such channels as casino mailings, newsletters and Web sites. Casinos also earn rewards for signing up customers through its Arriva Card on Demand program, used in 75 casino properties. The program allows casinos to process applications on the spot and give customers up to $10,000 in credit.
  Arriva's processor, Fiserv Inc., which helps originate loan accounts at the casinos, manages the accounts, tracks reward points and provides account-collections information, contends the card is helping to generate more processing revenue. "We are very pleased with the proactive growth we've seen [from the product], and we see a lot more on the horizon," says Dave Merrick, Fiserv vice president of global sales.
  Smith says Global will continue to grow the card program by adding new features and benefits, such as new ways to use points for travel services. And since it is still the only card of its kind in the gaming market, there is plenty of room for growth.
  "Until now, we've taken things slowly while we [learned to] understand cardholder usage and repayment behavior, and we have tested various marketing approaches," says Smith. "Now we'll apply this learning to really push and grow the program to make Arriva the credit card choice for gaming."
  Market observers say that, while Global Cash Access is well-positioned to cater to the casino market, other card issuers may not be able to offer a similar cash-advance product. "It's more difficult for a credit card issuer who does not have their foot in the door," says Aite's Bézard, who notes that Global's client base gives it an advantage. "Global Cash Access works with casinos already, and having that unique data drives the risk model. If an issuer doesn't have that relationship with casinos, issuing a similar card could be very risky."
  As of the end of June, there were 7,306 Arriva card accounts, up 40% from 5,234 accounts at the end of March. With no foreseeable competitors in sight, Arriva Card has an open road for growth.
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