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Buy now, pay later is one way of surviving a financial squeeze-as credit card companies in slump-ridden Latin America have learned.

Customer service campaigns, promotions and segmented marketing are some devices to keep the public dipping into their wallets.

With falling consumption, soaring interest rates and depressed markets in the region-many countries are suffering the tequila hangover of Mexico's financial crash last December-credit card companies are devising strategies designed to help consumers, and themselves, over the hump.

MasterCard in Venezuela focuses on stimulating domestic spending after government exchange controls, resulting from the current economic crisis, put a $2,000 annual cap on overseas spending with domestic credit cards.

Foote, Cone & Belding, Caracas, responded with ads themed, "The World is in Your Hands This Holiday." Cardholders receive coupons, raffled for foreign vacation trips, for every $29 they spend domestically.

MasterCard's main rival in Venezuela, Visa, lost ground after many banks that issued Visa cards went down in Venezuela's recent banking collapse. Visa's market share in March slipped to 53%, from 62% at the end of 1993, in a market worth $1.2 billion in 1994.

MasterCard's licensee in Argentina, Argencard, responded to the stagnant credit card business in the past year by targeting upper-middle-class cardusers in supermarkets, where usage reportedly is up.

Argencard, through agency Pragma/FCB, Buenos Aires, is running a $2 million campaign, "Superpromotion 10 Minutes." Argencard credit receipts are treated like raffle tickets, in which receipts are chosen from a hat, and the winner is reimbursed for the purchase.

Argencard followed this campaign with the Aug. 30 launch of its Lider ("leader" in Spanish) card, a campaign run by Agulla & Baccetti, Buenos Aires. Again, the campaign is aimed at the better-off, although the idea is to get people of various incomes to use the new card.

Market segmentation seems to be a preferred strategy among many credit card companies facing difficult times.

Jose Ramil, VP and general manager of MasterCard International in Venezuela, explains the approach: "We've tried to make changes to promote added value to our cards, as well as creating market segmentation programs. This allows us to create added value adapted to the characteristics of each market."

"It's the best thing we have to work with in crisis times," said Alejandro Cosentino, consumer card marketing director of American Express, Buenos Aires.

While credit card promotions are a recession-beating tactic in Argentina and Venezuela, in Mexico the emphasis is on improving corporate images of banks rather than boosting spending. With credit card interest rates in August hovering near 60% (down from a breathtaking high of 140% last year), banks are anxious to shake off their negative image.

According to Mexico's national financial daily, El Financiero, 54% of credit cardholders have problems with payment. Mexico's pre-crisis prosperity encouraged spending, particularly by the middle class, many of whom bought on credit.

When the crisis eventually hit, it hit hard. Many cardholders tore up their plastic in disgust at what they considered criminal interest rates. A recent government aid package will drastically cut interest rates to 38% this month.

"Banks have a very bad image," said Andrea Cardoso, Bancomer's marketing sub-director. "We did a lot of research and found that people were asking for rewards. [With our campaign] we are not trying to improve market share. What we want is client loyalty and to keep our customers happy."

Bancomer and Mexico's top bank, Banamex, give cardholders points when they use their cards. Points can be translated into cash or used to reduce interest charges or fixed annual charge.

Many Mexican companies, though, have used the credit carrot to solve the liquidity problem.

Mexican-owned airline Taesa, for example, has splashed high-profile ads nationwide which offer 12-month credit on domestic and some international flights. "With the crisis last December it was obvious that the market would contract. Our campaign anticipated that," said Taesa's Eduardo Cacho. He reports that more than 900,000 Mexicans have opted for the promotion since it began in early 1995. Household goods retailer Elektra also offers high-interest credit loans to encourage cash-strapped Mexicans to spend.

But the risk of encouraging buying on credit in the midst of a recession appears to be slim. The number of people with access to credit is low, and the credit available is controlled through credit checks.

In Argentina as in Mexico, only a quarter of the economically active population have access to credit cards. This figure increases slightly in the case of Costa Rica, to 30%. Where credit card debt has been a major headache, as in Mexico, the government has been obliged to solve the debt problem as part of a wider national rescue plan.M

Contributing: Peter Brennan, Mike Galetto and Sophie Hares.

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