Sub: Submission of Report on Status of credit card market in Bangladesh Dear Sir, It is a matter of immense pleasure for us to present before you the report titled ‘Status of credit card market in Bangladesh’ as per your instructions. Your guidance and teaching helped us as an invisible hand. We have tried our best to make this report a fault free one and we hope that you will take any unintentional mistake with kind consideration. Sincerely yours Group no# Section A BBA 12th Batch Department of Finance University of Dhaka Acknowledgement We gratefully acknowledge the guidance and assistance received from our group members and classmates while carrying out the study.
Saifuddun khan sir provided us with the necessary guidance in successfully preparing the report. He continuously reminded us about the preparation of this report paper and gave the necessary out-line to write down the paper spending his valuable time. Without his untiring efforts, completion of this report paper would have been impossible. Above all, this report is a combined effort of sincerity, efficiency and determination of all the group members. We want to pay our gratitude to all mighty Allah for enabling us to prepare the report successfully. Executive Summary Compiling a project paper is a rewarding task that requires both mental stamina and attention to detail.
The varied nature of the matters dealt with has entitled references too many sources, starting from books to brochures and to all of these we gladly acknowledge our indebtness for the ideas and information they have provided. Now, we are glad to thank our beloved faculty M Saifuddin khan, whose vast support, advice, encouragement and guidance ensured that this project saw the light of day. Whenever we face any kind of obstacle, we went towards him and he never made us upset. We are really thankful to him for his humble attitude toward us. Last but not the least, our group members who’s devoted afford make it easy for all of us to accomplish the project within the time at an efficient manner.
If they were not being so loyal to their work it would not be possible to systematize a high-quality project like that. Methodology This paper uses different assumptions like surveying the overall credit card market,staus of it in Bangladesh, credit card status, its uses ,present condition and its potential prospects for future. Now-a-days almost all private bank has launched credit card in their operation for easy withdrawal of money by the customers of these bank. So credit card has made the customers financial transaction easy and useful. Our term paper will try to make this report easy for the readers to know about the overall credit card market in Bangladesh. We collected data from internet, some periodicals ,and newspaper.
Hope we will be able to present the overall condition of credit card, its condition, prospects and status. . Introduction/ Background of the Report Credit Card The ‘credit card’, though a new phenomenon in business and transaction arena which had already won the hearts of millions across the globe, has set its foot in this part of the world with its magical power and becoming a way of life here by offering its handy feature and usefulness. In the advent of Information Technology and globalisation, now shoppers need not worry about money, all they need is willingness and a credit card to buy anything they want at any places across the ‘Global Village’.
Worldwide access, acceptability and popularity as well of credit cards have rose to such an extent that it is now posing a threat to theory of old ‘hard-cash’ possession of currencies amid growing sense of insecurity worldwide. The forward march of ‘plastic money’, the other name of the credit card, is so rapid that the whole concept of monetary system needs immediate review as it has put a question mark in the very existence of paper money. A credit card is part of a system of payments named after the small plastic card issued to users of the system. It is a card entitling its holder to buy goods and services based on the holder’s promise to pay for these goods and services. In details we can say, credit card is a plastic payment card that is accepted by a merchants worldwide with an encoded magnetic stripe on the ack that can be read at the point of sale. Credit Cards offer card members the ability to pay balances over time by applying an interest rate to outstanding balances. Background A credit card allows consumers to purchase products or services without cash and to pay for them at a later date. To qualify for this type of credit, the consumer must open an account with a bank or company, which sponsors a card. They then receive a line of credit with a specified dollar amount. They can use the card to make purchases from participating merchants until they reach this credit limit. Every month the sponsor provides a bill, which tallies the card activity during the previous 30 days.
Depending on the terms of the card, the customer may pay interest charges on the amount that they do not pay for on a monthly basis. Also, credit cards may be sponsored by large retailers (such as major clothing or department stores) or by banks or corporations (like VISA or American Express). Credits cards are a relatively recent development. The VISA Company, for example, traces its history back to 1958 when the Bank of America began its BankAmericard program. In the mid-1960s, the Bank of America began to license banks in the United States the rights to issue its special BankAmericards. In 1977 the name Visa was adopted internationally to cover all these cards. VISA became the first credit card to be recognized worldwide.
Origin of credit card:
The concept of using a credit card for purchases was described in 1887 by Edward Bellamy in his utopian novel “Looking Backward”. The modern credit card was the successor of a variety of merchant credit schemes. It was first used in the 1920s, in the United States, specially to sell fuel to a growing number of automobile owners. In 1938 several companies started to accept each others cards. Western Union had begun issuing charge cards to its frequent customers in 1921. Some Charge cards were printed on paper card stock, but were easily counterfeited. The Charge-Plate was an easily predecessor to the credit card and used during the 1930s and late 1940s. t was a 2 1/2″ x 1 1/4″ rectangle of sheet metal, similar to a military dog tag, that was embossed with the customer’s name, city and state (no address). It held a small paper card for a signature. It was laid in the imprinter first, then a charge slip on top of it, onto which an inked ribbon was pressed. Charga-Plate was a trademark of Farrington Manufacturing Co. Charga-Plates were issued by large-scale merchants to their regular customers, much like department store credit cards of today. In some cases, the plates were kept in the issuing store rather than held by customers. When an authorized user made a purchase, a clerk retrieved the plate from the store’s files and then processed the purchase.
Charga-Plates speeded back-office bookkeeping that was done manually in paper ledgers in each store, before computers. The concept of customers paying different merchants using the same card was invented in 1950 by Ralph Schneider and Frank. X McNamara, founders of Diners Club, to consolidate multiple cards. The Diners Club, which was created partially through a merger with Dine and Sign, produced the first “general purpose” charge card, and required the entire bill to be paid with each statement. That was followed by Carte Blanche and in 1958 by American Express which created a worldwide credit card network (although these were initially charge cards that acquired credit card features after BankAmericard demonstrated the feasibility of the concept).
However, until 1958, no one had been able to create a working revolving credit financial instrument issued by a third-party bank that was generally accepted by a large number of merchants (as opposed to merchant-issued revolving cards accepted by only a few merchants). A dozen experiments by small American banks had been attempted (and had failed). In an odd coincidence, both of the products that finally succeeded were born in the U. S. state of California. In September 1958, Bank of America launched the BankAmericar in Frensco, California. BankAmericard became the first successful recognizably modern credit card (although it underwent a troubled gestation during which its creator resigned), and with its overseas affiliates, eventually evolved into the Visa system.
In 1966, the ancestor of MasterCard was born when a group of California banks established Master Charge to compete with BankAmericard; it received a significant boost when Citibank merged its proprietary Everything Card (launched in 1967) into Master Charge in 1969. There are now countless variations on the basic concept of revolving credit for individuals (as issued by banks and honored by a network of financial institutions), including organization-branded credit cards, corporate-user credit cards, store cards and so on. Physical Feature The credit card is rectangular and looks like a phone card. It is a layered piece of hard plastic with holograms and security features.
It also carries a strip of magnetic tape on the back which is loaded with electronic data including the cardholders details. The strip is read electronically by specialized machines called Point of Sale (POS) Terminals at merchants or Automatic Teller Machines (ATM). From the above of credit card we can sort out some properties of credit card.
- It is a plastic card with a coded magnetic stripe.
- It is issued by financial institutions.
- Allow consumers to purchase without cash and to pay at a later date.
Kinds of Cards There are mainly two kinds of cards-credit card and debit card. By credit card one can purchase from stores called merchants, the price of which is payable at the end of the month through the affiliated banks as per notification.
On the other hand, debit card is based on immediate payment system whereby one has to insert card into the ATM (Automatic Teller Machine) located at the key spots in the city. And so it is often called electronic purse. For debit card one has to have an account in a bank while credit card does not necessitate any such provision. Objectives of credit card: credit card, device used to obtain consumer credit at the time of purchasing an article or service. Credit cards may be issued by a business, such as a department store or an oil company, to make it easier for consumers to buy their products. Alternatively credit cards may be issued by third parties, such as a bank or a financial services company, and used by consumers to purchase goods and services from other companies.
There exist some objectives of credit card. These are:
- Offering consumers an easy way to track expenses, which is necessary for both monitoring personal expenditures and the tracking of work related expenses for taxation and reimbursement purposes.
- Providing the consumers more secured transactions.
- Discouraging theft by the merchant’s employees and reduce the amount of cash on the premises.
- Providing aid in securing a sale, especially if the customer does not have enough cash on his or her personal or checking account.
- Providing more fraud protection.
- Eliminating the need to carry any cash for most purposes.
- Introducing financial flexibility into modern consumers’ lives.
Criteria to be a cardholder A person has to fulfill some criteria to be a cardholder. Every bank has its own array of criteria by which the qualification of an applicant is assessed. The criteria may range over such factors as income range, social status, place of living, education, designation etc. It’s quite natural that if the selection criteria for members are more flexible then their clients would be more. On the other hand, if the selection criteria is more conditional and harsh then its operation would be limited. Credit Card Functions Credit card performs some important functions. These are
- Accessing the credit card list.
- Adding a credit card.
- Authenticating a credit card.
- Editing a credit card.
- Making a credit card.
Parties involved in the credit card:
- Cardholder: The hol Cardholder: The holder of the card used to make a purchase; the consumer.
- Card-issuing bank: The financial institution or other organization that issued the credit card to the cardholder.
- Merchant: The individual or business accepting credit card payments for products or services sold to the cardholder.
- Acquiring bank: The financial institution accepting payment for the products or services on behalf of the merchant.
- Independent sales organization: Resellers (to merchants) of the services of the acquiring bank. Merchant account: This could refer to the acquiring bank or the independent sales organization, but in general is the organization that the merchant deals with.
- Credit Card association: An association of card-issuing banks such as Visa, MasterCard, Discover, American Express, etc. that set transaction terms for merchants, card-issuing banks, and acquiring banks.
- Transaction network: The system that implements the mechanics of the electronic transactions. May be operated by an independent company, and one company may operate multiple networks.
- Affinity partner: Some institutions lend their names to an issuer to attract customers that have a strong relationship with that institution, and get paid a fee or a percentage of the balance for each card issued using their name.
Examples of typical affinity partners are sports teams, universities, charities, professional organizations, and major retailers. An overview of credit card: The growth of credit card use in the United States since 1970 has been dramatic. In “Credit Cards: Use and Consumer Attitudes,” an article published in the September 2000 issue of the Federal Reserve Bulletin, author Thomas Durkin reports thirty years of credit card statistics based on the Survey of Consumer Finances, a household survey conducted every three years by the Federal Reserve Board. In 1970, 16 percent of households held at least one bank credit card; by 1998, 68 percent of households did so. Only 37 percent of families with a bankcard carried a balance in 1970, but 55 percent did so in 1998.
For those carrying a balance, the average balance, adjusted to 1998 dollars to eliminate the influence of inflation, was $839 in 1970 and $4,073 in 1998. The likelihood of having a credit card rises with income: in 1998, only 28 percent of families in the lowest fifth of the income distribution had a bank credit card, while 95 percent of those in the highest fifth did. Families in the highest income bracket are more likely to pay off their credit card bills each month than are families in all other income brackets. 55 percent of families in the top fifth of the income distribution pay off their cards each month, but only 40 percent of families in the bottom four-fifths of the income distribution do so.
The 1990s rise in credit card debt went hand in hand with a drop in personal saving. Increased availability of credit cards might have led consumers to spend more than their incomes, accounting for the drop in saving. But the 1990s rise in the stock market increased wealth and led consumers to spend rather than save; perhaps families simply chose the convenience of charging rather than paying with a check or cash. Whichever causal story is correct, the rise in spending, drop in saving, and rise in credit card use in the last fifteen years of the twentieth century are certainly correlated.
Charcteristics of Highly Profitable Card Business in Bangladesh Electronic payment industry is stepping into maturity in Bangladesh.
Banks are now more focused on investing in card business either in the form of debit card and/or credit card; independent processing or processing though third party. In whatever way it is, business is growing with a positive trend. It is expected that within next two to three years, Bangladesh will experience a 100% growth in card industry especially in debit card. More banks are becoming on-line and started issuing debit card. On the other hand, lifting of AIT from credit card bill will augment card usage. But return from this high profile business does not show expected results as of now. It always remains blurred to most of the local banks how to ensure substantial profit from card business.
There are a number of ways to look at profitability in the card business and each in turn may be the most relevant depending on the purpose of the financial analysis. The following is a list of ways which one may consider the economics of card business:-
- Transactional level: Banks must focus on profitability per transaction. This approach is useful when considering how to encourage certain types of customer behaviour, including the role of loss-making transactions, play in the overall mix.
- Card level: Bank needs to focus on profitability per card. This is key to customer segmentation. We need to define our profit maximisation strategies basing on per card profitability.
- In turn, this will serve to identify the most customer profitable behaviour and also will help in the customer servicing strategy.
- New customer – we need to assess the cost of acquisition of any new customer to determine whether such acquisition is likely to be a profitable. We also need to identify what is his potential, his risk profile and his likely behavior
- Existing customer – we need to assess whether we have profitable customer relationship with any given customer. For example, are insurance and non-card lending opportunities being maximized? What are the prospects when considering all cross- selling opportunities for other bank products?
Segment level: Considering size and margin of any particular segment we focus, is this a profitable segment. What are the comparative returns opposite other segments, to what extent should this be a focus and what are the opportunities for profit improvement? Product Level: We need to assess whether the products we have ensure substantial profit for us. Considering size and margin, to what extent should this be a focus, how well does it suit the current market and is it necessary to change anything to improve product profit performance? We need to identify how we can best balance the product mix?
Portfolio level: What are the current and prospective economics of our portfolio?
It is worth acquiring and at what price, what synergies can one extract, how can one use it to drive premium revenues and margins, what other cross selling and profit improvement opportunities exist, what data, technology, management or other intellectual capital will one acquire and what value should one place on that? Country P & L level: what are the prospects for the country? What are the fixed and variable elements of the economic structure and so to what extent should one be investing in scale or focusing on marginal contribution through cost revenue re engineering? What is the sum of the above opportunities for this market? Business Unit level: We need to identify how ROA and ROE stand up against industry and market best in class. What mode we have chosen – growth or profit harvesting mode? What role does card play in overall strategy of the inancial institution and what key measures of performance should one be setting? Most often more than one method will be used. All these particular dissections will feed into strategic and tactical decision making. They should naturally weave themselves into the planning and decision making processes of the business. Once we have exercised the above, turning to the key elements of card business strategy can then determine successful and profitable businesses. It is suggested by world leaders in card industry that to make a highly profitable card business each bank must have the following characteristics:
- Economies of scale and scope
- Strategic market positioning
- Customer loyalty
- Customer service orientation
- Operational efficiency
Continuous business redesign There are particular challenges to exploiting these characteristics in the financial card business in Bangladesh and besides, how well these characteristics are adopted and performed in each bank that is most important. CREDIT Cards used to be a status symbol when a middle aged man of today was young which was five years before today , in the fanciful mind of a middle aged man ! However the fact is, it was some 25 years back that one fellow student of Dhaka University showed a credit card, clearly reveling at the privilege of being able to use one such card that this writer came to see up lose and personal for the first time . It was a time when the banking scenario had not changed , most people took the public banks as the ones representing banking as it was , meaning long lines , token-based service , large ledgers and long delays and ultimately less than the acceptable standard of behavior. The emergence of credit card is the single most denominator of the “consumerist” revolution that the new generation banks have ushered in. There is now ample feeling that the ushering in of modern banks with these competitive urges, have been a positive development in the “consumer-oriented financial services ” aspect in the capital city of Dhaka .
Of course, the banks have introduced excellent modifications to the old style banking described above by having gleaming new offices, modern branding techniques, multifarious pakcages and products, wonderful working environment, proliferation of credit facilities for the development of the eonomy , and consumer credit middle class and high-class consumer that ultmately creates a chain of financial transaction that facilitates the percolation of money to the small businesses which have sprouted in so many markets in and around Dhaka . This consumer culture sustains many even smaller support businesses all around the city and outlaying areas. Credit cards come with certain “side effects” which should be well understood. Those side effects can be avoided if we understand the different formalities attached to the credit card facility that the bank needs to be performed to make the “credit card experienece ” a useful experience .
Matters like interest rate set-up or just the fact that the credit card is actually money being given with interest charges applicable, repayment dates for the money charged on the card , fees and dues to be paid to the bank etc. and these fomalities need to be understood thoroughly before taking a credit card. Customers in Bangladesh have been spared from the large gangs of tricksters found in developed countries simply because credit card is still not used in a very big way in our country. Credit card forgery, usage of stolen credit cards, copying of personal information for dishonest purposes are some of the chicken perpetrated on unsuspecting consumers. Users themselves also can become addicted to shopping if one starts using the credit cards indiscriminately but such matters are not a fault of the credit card itself .
One has to understand that personal habits have got nothing to do with the instrument in use while abusive behaviours is being practised. But it is true that credit card can sometimes be detrimental to the personal financial situtaion as the user keeps using the card and may not have time to repay the bank in time or in more serious cases , can just find the ease of shopping with no cash to easy , thereby falling in the a debt trap . However , that is an inevitable side effect of the modern times that we live in where the consumer may want every thing that the consumer oriented society is offering . That is the trap of the times and not a fault of the ubiquitous and most useful instrument that the cerdit card is .
Just to be sure that the bank is looked as a careing life partner as well , maybe there should be advisory notifcations in the credit card departments of banks warning consumers that credit card usage needs to be accompanied by careful personal habit like self assesseement of financial abilities and an eye to the formalities of maintaining credit cards . The “card executive ” should be skilled in making the credit card experience for the customer a safe experience that enhances the bank’s consumer friendly reputation . Credit card is a consumer friendly device after all. Credit card industry analysis of Bangladesh: Now a day credit card is quite familiar in the world and it is also familiar in Bangladesh. Many renowned banks in Bangladesh are providing credit card facility to their consumers.
From the above profit chart of 2006,2007 and 2008 we see that , profit from credit card is increasing year to year but the proportion of contribution to the total profitability by credit card is not so significant. Moreover, as some banks has started it newly so their credit card’s contribution to the total profitability is not calculated yet. But by observing the current situation credit card in different banks we expect that in future the number of credit card holder will increase and as a result of increasing use of credit card its contribution to the total profitability will also increase. Cost of credit card Credit card issuer(banks) has several types of cost.
Among them advertising cost(including billboard, news paper, electronic media, persona selling etc), Interest expenses( cost of bank’s borrowing from other banks), Operating costs(the cost of running the credit card portfolio), Charge offs(is considered as “written off as uncollectible”), Rewards to customers (customers receive rewards, such as frequent flyer points, gift certificates, or cash back as an incentive to use the card. ),Fraud( is a major white collar crime) etc are common types of cost. Now we will see the amount of cost of credit card in our selected banks.
Card replacement Local TK 2000 TK 1000 Credit Card offered currently in Bangladesh market There are now countless variation of credit card in the world which are offered by different banks. In Bangladesh credit card is a newly offered product. Till now many bank has not started this facility. In Bangladesh those banks who have introduced this facility currently offered different types of credit card to their customers. They have their own brand name for their offering credit card. To know the currently offered credit card in Bangladesh market we can see the credit card offering of our selected banks. Bank Asia Ltd
The name of credit card brand in this bank is VISA and MasterCard. Various types of credit card offered currently by them are:
- VISA Gold (Dual)
- VISA Classic (Dual)
- VISA Local Gold
- VISA Local Classic or Silver
- VISA Tuntuni
- MasterCard Gold
- MasterCard Silver Commercial Bank Of Ceylon
The name of credit card brand in this bank is Visa card. Various types of credit card offered currently by them are
- Gold and
- Classic Exim Bank Ltd
The name of credit card brand in this bank are Visa card, Master card. Various types of credit card offered currently by them are:
- Gold card .
- Classic card (Visa)
- Silver card (master) NCC Bank Ltd
South East Bank Ltd Marketing strategy followed by this bank is:
- SE bank’s marketing strategy and focus is limited to specific group of target customer.
- They are very strict and rigorous in issuing credit cards.
- 80% of their total card base are bankers, 10% are businessmen issued through other branches, 8% are other organizations and 2% are other miscellaneous businessmen.
Eastern Bank Ltd Marketing strategy followed by this bank are:
- priority treatment and a growing range of courtesy services.
- the free renewal option for the following year.
- a full-fledged cheque book facility.
- provide supplementary card. Mercantile Bank Ltd
Marketing strategy followed by this bank are:
- No push sell.
- Not too liberal
- Tough assessment
- Low interest
Occasional discount IFIC Bank Ltd Marketing strategy followed by this bank are:
- Increasing number of profitable customers rather only increasing the number of customers
- Targeting to attain almost 15% growth in every year in revenue from credit car
- Increasing number of ATM booths for ease of customer
- Maintaining adequate POS machine
Providing training to its sales staff. Jamuna Bank Ltd Marketing strategy followed by this bank are:
Convincing the existing customers of JBL by branch employees. Target customer of different organization Bank has their own choice to whom he will provide credit card. Normally we know that credit card is used by the people who have higher level of income. Basically banks want to provide credit card to that people whose income is higher such as businessman, high designated person, engineer, university teacher etc. On the other hand some bank provide their credit card facility only a small proportion of people, in this case they follow conservative approach. In Bangladesh those banks who have this facility have also their choice about their customer. Now we will see the target customer of our selected banks. Bank Asia Ltd This bank has its own choice about customer.
Credit card is a new launching product in Bangladesh so there exist some obstacles or we can say constraints at the issuance of this card. These types of constraints exist because of many reasons, such as age limit, lack of knowledge about electronic media, lower income, intention to fraud, tendency of making delay about payment, lack of conscious about credit card etc are common. To analyze the credit card industry of Bangladesh proper knowledge about these constraints is mandatory. Most of the people have very low electronic knowledge
City Bank Ltd City Bank is facing the following constraints:
- Although City bank has a good number of customers, Bank has found difficulty in schooling their customer how to use these cards.
- POS machine are not adequate
- Imposition of additional 15% vat discourages customers.
- As it is very risky product and no collateral is required, Bank needs to be very cautious in customer appraisal procedure.
IFIC Bank Ltd IFIC Bank is facing the following constraints:
- Limited number of ATM booths
- POS machine are not adequate
- People are not familiar with the use of this technology
- Imposition of additional 15% vat discourages customers.
As it is very risky product and no collateral is required, Bank needs to be very cautious in customer appraisal procedure. Jamuna Bank Ltd This bank has no constraint in this area of credit card. Prospect of the credit card market of Bangladesh Because bank account holders are becoming interested to hold card as lessened the hassle of holding cash the future prospect of credit card in Bangladesh is quite bright. Moreover in different organization the contribution of credit card to the total profitability is significant. And this contribution is increasing day by day. So we expect that in future bankers will be more interested about credit card.
Now we will see the prospect of credit card in our selected banks which will help us to measure the future prospect of credit card in Bangladesh market.
Bank Asia Ltd The prospect of this bank are:
- The Bank has got good prospects. In 2009, it is in the 2nd position behind only Standard Chartered Bank.
- All the branches perform credit card operation; mainly more response from divisional districts. Commercial Bank Of Ceylon Prospect of this bank is bright enough. –
- Numbers of customer in their general banking service is increasing. They have targeted these customers groups. So they are expecting this credit card division will be successful Exim Bank Ltd Prospect of this bank is bright enough because:
- VAT ,purchasing power increases, GDP growth increases, company revenue as well as domestic production increases. NCC Bank Ltd As the revenue of the bank from the credit card division is increasing year to year and it contributes a huge amount to the total profitability of the organization it can be said that –“The prospect of this division is well enough. ” Dutch Bangla Bank Ltd Prospect of this bank is bright enough because:
- VAT ,purchasing power increases, GDP growth increases, company revenue as well as domestic production increases. Janata Bank Ltd Janata bank has to come out of traditional banking services to provide future technology oriented banking services.
If the bank can prepare necessary plan and handle the activities properly, then its credit card market share can certainly grow. But at first, bank’s core banking software needs to be developed. Its whole banking system has to be made automated; which is a mammoth task considering the size and extent of the bank’s operation. And given it employs proper manpower and resources, credit card market expansion will become easy. South East Bank Ltd The prospects of SE bank are:
- Single Card – Dual Use (Local and International)
- Widely accepted at Merchants and ATMs worldwide
- Competitive annual/renewal fee
- 50 days interest free credit facility
- 50% card drawing facility at ATMS and any SE bank branch
- Sms Push-Pull service
24 hours customer service etc Mercantile Bank Ltd Although it needs expensive infrastructure, expensive set up is required and Visa charge is also high It’s Prospect is bright. Because bank account holders are becoming interested to hold card as lessened the hassle of holding cash and others attractive facilities are also available. City Bank Ltd Future prospect of City Bank credit card is very attractive. In response to the customer’s increasing demand City Bank is going to launch MS CARD. Only sophisticated and high income class people are eligible for it. The growth of their number of customer is also satisfactory.