Johannesburg — ABSA and Virgin Money are expected to announce a tie-up soon which will see Absa processing and distributing the Virgin-branded credit card in SA.

Although neither group would confirm they were talking, one industry source said a deal was imminent and likely to be announced today or tomorrow.

Virgin's entry to the credit card market would add to already growing competition, which has seen a number of retailers partnering banks to offer credit cards with no annual fees and easier access. Life assurer Metropolitan is testing the waters for a credit card for its policyholders, backed by Mercantile Bank.

A joint venture with Virgin would give Absa the edge over its competitors, as it was precluded from using the Barclaycard brand until next year after Barclays was forced to dissolve its joint credit card venture with Standard Bank when Barclays bought Absa last year.

Virgin Money has been rumoured to be looking for partnership opportunities in SA for over a year. It has held discussions with Standard Bank.

"We are busy working on a deal at the moment," said Virgin spokesperson Tracy Meaker. She said the group was looking at launching a product this year which would "bring consumers more choice and more value for money".

Outstanding credit card loans grew 43% in the 12 months to January to R32,2bn as lenders took advantage of growing consumer demand, spurred by sustained lower interest rates.

Faizal Moolla, banks analyst at Metropolitan Asset Managers, said apart from banks, a number of retailers and microlenders were entering the credit card market.

"Although there are good growth opportunities in the segment, the competition is intense," said Moolla.

He said new entrants would have to offer incentives to customers to gain a share of the market, such as no annual credit card fees or credit at lower interest rates. The Edgars credit card, which is backed by Standard Bank, does not charge fees.

"From what the bank has indicated, it has been doing quite well," said Moolla.