Dubai: When the Wages Protection System (WPS) was launched in the UAE on September 1, 2009, little did people think then that plastic cards would make their way into the lives of an average blue collared worker who barely spoke English.
Today, it’s a different story. Hundreds of thousands of workers in the UAE are card holders - thanks to banks, exchange houses and financial institutions who are involved in disbursing workers’ wages under the WPS system.
Take the case of Bangladeshi office boy, Alamin MD, 24, earning Dh1,300 a month. He has been a cardholder for the last four months. “My salary is really precious to me as my family depends on it. With a card I definitely feel safe to keep. Even if my card gets stolen, I know nobody can take my money away as the card is password protected. Unlike before when I used to feel restless keeping cash in hand with so many others in a room, today, I am sleeping better at night.”
Alamin has also slowly learnt to retain some money in the card for a rainy day. “I send half of this money to my family. I keep some cash in hand to pay my mess bill. Rest whatever is left I leave it in the card so I can use for any eventuality in the future.”
He has a Smart Pay Card, issued by UAE Exchange as part of the WPS programme. This card is available is designed for all salaried class, however, 90 per cent of its card base is used by workers earning Dh2,000 and less. There are more than 300,000 Smart Pay Cards in the UAE today. Every month, an average 8,000 to 10,000 new cards are being pumped into the market.
“The card acts like a debit card and can be used in different Point of Sale (POS) machines around the UAE. It allows a zero balance with no cost, no maintenance fee, discounted rates for purchasing at different retail outlets as part of a loyalty programme, amongst other benefits,” explains Sudhir Shetty, COO, Global Operations, UAE Exchange.
Alamin also said retaining a little money in his card, has helped him to repay small debts. “I borrow less money now and have even managed to pay off small amounts to some people.”
Clearly there is a behavioral change happening in the mind-set of these workers who have traditionally spent all their earnings in sending home or paying for food. “When there is cash in hand, there is definitely a tendency to spend it all off. With a card, the workers are finding a way to keep a little money back in the card,” explains Shetty.
Another worker, a Pakistani mason, Mohsin Abbas Barkat Ali, 36, earning Dh1,400 a monthi is learning the full potential of his Smart Pay Card. “I use my card to spend in some of the smaller supermarkets for some basic grocery as well. The card basically helps me to keep as little cash as I can in my room.”
Mohsin withdraws his salary from any of UAE Exchange’s 120 branches for no cost whatsoever. He also gets to avail discounts at select outlets in the UAE. As an example, the Smart Pay Card can fetch you a 25 per cent discount on tickets at Dubai Dolphinarium, 40 per cent discount on desert safari, 50 per cent discount on Dhow Cruise and 40 per cent discount on Dubai City Tour, amongst others. The card also offers six free classes at Galadari Motor driving outlets.
More workers with cards today are sleeping better at night without having to worry about losing their money tucked under their pillow. With constant awareness programmes meted out to them, they are slowly learning to live a life the cashless way. As card issuers get more creative bringing more and more benefits on cards, workers are learning to adapt to the new technological advancements around them.
“When we launched the Smart Pay Card in 2008-2009, we never thought this class of people would use these cards at merchant outlets. But today, we see them swiping cards for small shopping at supermarkets. In fact, cash has always proved risky for these workers. Since they are not eligible for bank accounts, workers were forced to find ways to safe-guard their money and wait for a time to go and remit their money. Today with a card, there is far more security with their money,” said Shetty.
“Before WPS, the biggest apprehension was that workers were not getting their salaries on time. Salaries were also not paid as per contracts. The WPS, however, addresses these issues today. Now the salary being disbursed to workers can be tracked by the Ministry of Labour and Central Bank. Salary payments are reflected real time. Because of the convenience of using these cards, today, workers are cleared off some anxiety,” he added.
Lulu International Exchange is another player in the market with 80,000 cards issued till date under the WPS system. “Nearly 70 per cent of them are being used by blue-collared workers in the UAE. As soon as the employer deposits the salaries of their employees, through the Central Bank WPS (Wage Protection System), we transfer the funds to their respective cards. The card acts like any other ATM card, mitigating less amount of risk for the workers as there is no cash involved. They can safely keep it with them with no risk of money being robbed. Since they don’t carry cash around, this also translates into more savings,” said Adeeb Ahamed, Chief Executive Officer (CEO), Lulu International Exchange.
Al Fardan Exchange too is not far behind and has issued around 45,000 e-money cards to workers earning Dh2,000 and less. “The card is a prepaid payroll card which is provided to workers registered under our WPS pay roll system,” explained Osama Al Rahma General Manager, Al Fardan Exchange.
“Unlike a general pre-paid card, the e-money card cannot be loaded by the card holder. The source of fund on the card is always the workers’ salary from the employer. The employee cannot load the card himself,” he said.
The way e-money card works
According to Al Fardan Exchange, a first time cardholder needs to bring the card to any of its branches and verify it for the first time with a valid UAE ID. Upon verification the teller in the branch will facilitate the activation of the card by allowing the cardholder to put in the desired PIN for salary withdrawals through Point of Sale (POS) machines or ATMs. The card can be used on POS machines deployed at any of Al Fardan Exchange’s branches for salary withdrawal and remittances, in addition to ENBD’s ATMs.
“Cards are one of the most secure ways of protecting workers’ wages. It secures their funds on the card as it cannot be used without having the original card and the PIN. The worker can also withdraw only the amount required for use instead of having the whole salary withdrawn all at once. This also reduces the risk of having the entire amount withdrawn or stolen,” said Al Rahma.
Need to educate
Efforts are on-going by card issuers to constantly educate workers on how to use their card optimally and try and remain as cashless as possible.
In the middle of 2012, UAE Exchange launched the ‘Mission zero suicide’ to educate workers on the importance of living debt free. Part of the campaign was also to raise the awareness with the workers on how to use the card wisely. “We met more than a million workers across different camps and conveyed to them the importance of saving money and living a debt free life. After a lot of deliberations and informing the benefits of saving, we are seeing some changes in the workers’ behavioural pattern. Although the purpose of the Smart Pay Card is essentially to disburse salaries, workers have naturally adopted to withdraw only necessary monies and retain the rest in their card,” said Shetty.
“We constantly visit camps where our cards have been issued and teach them how to use the card, swipe it in POS machines. We go with a team speaking different languages so we can explain the benefits of the card clearly.”
Yet, there are many who are not using their card to the full potential.
Take the case of Radhakrishnan K, Indian, 56, earning a salary of Dh1,653 per month. He says he withdraws his complete salary from his Smart Pay Card and keeps cash with him. “I am used to having my cash with me. But now that I am seeing other people keeping back money in their card and only withdrawing as much as they need, I will start doing the same.”
Another worker Amuthan Alagarasa, 29, Sri Lankan earning Dh2,000 a month said: “I have my card for the last four months. I have been spending all my money in the card. I withdraw most of my salary and send home. Rest I withdraw and keep with me to pay my mess bills. My friends who use the card have been telling me to not withdraw all the money and I will do that from next month.”
Osama Al Rahma, General Manager, Al Fardan Exchange said : “Many workers still use their card to withdraw their salary completely. We are constantly sending our team to camp sites to educate workers on the benefits of their card and to teach them how to use it and where they can use it. We also tell them not to share their PIN with others Ultimately, it depends on the worker himself as to how soon he can get used to using his card optimally. It will take time before they learn to use them fully.”
UAE Exchange’s Shetty said: “We have a dedicated team that looks into educating not just the workers – but also their camp bosses on how they can use their card and learn the benefits that come with it. Our team talks to them in different regional languages so they understand clearly what we are talking about. Our cash disbursing machines too come in multiple languages which the workers can listen and learn from.”
Workers may not all be completely cashless today. But, seeing them swipe their card in merchant outlets, seeing them withdraw money from ATM machines is a step in itself to engage these blue collared workers in new trends.
What is WPS?
Wages Protection System (WPS) is an electronic salary transfer system that allows institutions to pay workers’ wages via banks, bureaux de change, and financial institutions approved and authorized to provide the service. The system, developed by the Central Bank of the UAE, allows the Ministry of Labour to create a database that records wage payments in the private sector to guarantee the timely and full payment of agreed-upon wages.