Why UAE’s ‘Jaywan’ card payment scheme will be a winner from Day 1

What is common to Eftpos in Australia, Elo in Brazil, RuPay in India and Mada in Saudi Arabia?

They are all domestic card payment schemes that provide the national rails inside each of these countries to facilitate debit card and credit card payments, the same way Mastercard and Visa do for international payments.

The UAE is joining the club soon with the launch of Jaywan, a scheme that will make domestic card payments a breeze. There are about 90 domestic card schemes globally with nearly 2 billion cards in force. While that is less than 8 per cent of the 26 billion plastic cards in circulation today, a majority of markets are increasing nationalisation of card payments actively, especially for debit cards.

In the GCC, apart from Mada in Saudi Arabia, domestic schemes like Benefit in Bahrain and KNET in Kuwait have become popular in recent years.

Going national

The advantages of a domestic card payment scheme are many. First, most domestic schemes tend to have a lower merchant discount rates than international schemes, thereby benefiting merchants.

In fact, in 63 per cent of countries with domestic schemes, the merchant discount rate is less than half of that charged by international schemes. Second, domestic card schemes can be designed to target not just underserved and underbanked consumers, but also marginal merchants who are yet to be digitized. Finally, many countries would prefer to keep the transaction data of citizens within national borders, and keep all transaction fees within the local economy.

However, there can also be some challenges for domestic schemes. Lower fees might restrict the ability to invest behind innovations, and make customer reward schemes less attractive. Capabilities on chargebacks, security and fraud control might be less robust than international schemes. And international acceptance might be a concern for global travelers.

A homegrown ‘pearl’

Jaywan, meaning ‘precious pearl’ in Arabic, is the UAE’s own domestic card scheme. It is being launched by Al Etihad Payments, the country’s national payments entity created in 2023 and a subsidiary of the Central Bank of the UAE.

The program will enable financial institutions to issue Jaywan-branded payment cards to UAE residents and facilitate transactions progressively across ATMs, point-of-sale terminals and e-commerce platforms in the country.

Through partnerships with popular domestic and international schemes, RuPay and Discover to start with, Jaywan cards will also be usable globally, facilitating seamless and secure transactions for UAE residents abroad.

There are many advantages to the different stakeholders. Banks will benefit from reduced initial costs for integration as well as competitive fee structures. Customers will be able to make payment transactions across physical, contactless and digital channels.

Leading regional acquirers such as Network International and Magnati have announced acceptance of Jaywan across their merchant networks, ensuring widespread access and reach across the UAE. Additionally, high levels of data security and privacy will ensure that customer and transactional information is protected and remains safe.

Says Jan Pilbauer, CEO of Al Etihad Payments: “Jaywan is designed for everyone in the UAE. Our goal is to make payments seamless, secure, and more affordable, supporting the UAE’s vision for a digital-first economy.”

UAE banks have commenced roll out of the program including preparing their ATM networks to enable cash withdrawals on the card, and the new scheme will be progressively extended to all customers over the next two years.

A cashless future

Domestic card schemes are expected to drive increasing volumes of transactions everywhere, including in the Middle East. Regulators globally are also weighing in. The Reserve Bank of India insists on data residency from all schemes.

The Durbin Amendment in the US requires issuers to ensure debit card transactions can be processed in at least two unaffiliated networks, encouraging competition among networks and driving costs lower. In Europe, PSD3 rules ensure that payment system operators do not inhibit access to the network without sufficient reasons.

As for UAE, apart from Jaywan, a number of innovations are in the pipeline in the payments ecosystem. The instant peer-to-peer payments system Aani is being rolled out with the objective of making all small value payments instantly available 24/7.

Soon you will be able to make a cardless payment to a merchant via static or dynamic QR-codes that link straight to your bank account or digital wallet.

The UAE Central Bank is reportedly working on a digital currency. And crypto-payments are not too far away. Wonder who will need cash anymore?