UAE has a third of region's credit cards

Dubai: Residents of the UAE hold nearly one-third of the credit cards in the 275-million strong Middle East and Pakistan region, making it the most important local market for the credit card industry.

Just 8.5 million credit cards have been issued in these emerging markets, according to figures provided by payment system MasterCard.

In the UAE, the second largest Arab nation by gross domestic product, 2.2 million people out of an overall population of 4.1 million have bank accounts. Collectively they own 2.4 million credit cards, said Denzil Lawson, MasterCard Middle East and Levant general manager.

The figures underline the UAE's importance in the region's credit card industry despite its relatively small population, he said. While 59 per cent of UAE residents own credit cards, just five per cent of Saudi residents have credit, and a paltry 1.9 per cent in Egypt own credit cards.

High penetration

"These are still in relative terms emerging markets," Lawson told Gulf News yesterday. "Out of these, Dubai and the UAE have both the highest penetration rates and the most number of access points," he said.

Despite the huge gaps between those with credit cards and those without, for companies like MasterCard, which earned $3.32 billion last year, the future only looks bright as banking services start to take root.

"The market is growing here, in fact it is leading the world in growth," he said. Revenues from MasterCard's South Asia, Middle East and Africa region grew 47 per cent last year.

Across the region, penetration rates vary widely, making the market more complex and nuanced than in developed economic regions.

In Saudi Arabia, out of a population of some 24 million people, there are eight million with bank accounts. Out of this 7.5 million use debit cards, but just 1.2 million own credit cards.

The credit gap grows even larger for Egypt's 79 million residents, where just 10 million have bank accounts and of these 3.2 million own debit cards. In the region's most populous country, a mere 1.5 million credit cards are in use.

By comparison, there are roughly three credit cards per resident in the United States, at some four cards for each Japanese resident. "This region is generally lacking in scale," he said.

Numerous payment systems process anywhere from 100,000 cards on up, even though one system could be used to securely handle as many as five million cards. "This makes a tremendous case for outsourcing," he said.

Bringing local penetration rates, which are in line with other emerging markets, closer to more developed economies requires awareness campaigns to educate the public about credit, Lawson said.

Cash happy

But in this region, many people in the region prefer using cash and avoid using credit, he said.

"It's an evolutionary thing and these things take time," he said. "The main reasons why rates are low here are cultural barriers and lack of customer education. People need to be familiar with these products and they need to understand the core benefits."

New swipe service for people on the go

Payments through credit card represents only 10 per cent in the region.

"Today in this region 90 per cent of transactions are in cash, and 10 per cent are through credit. Over time, we expect that to be the reverse," said Denzil Lawson, MasterCard Middle East and Levant general manager. MasterCard is launching a war on cash. He said it is the practice of paying with cash, and not rivals Visa or American Express, that poses the biggest threat to the company.

MasterCard, as well as other payment services like Visa, are rolling out fast, convenient ways to make small purchases without the need to enter PIN codes and endure long approval times.

MasterCard PayPass cards come equipped with radio frequency chips so consumers can simply swipe the card an inch away from special terminals located at gas stations, fast food outlets, supermarkets and coffee shops for instant approval.

The cards are programmed for small purchases - bigger sales require PIN code verification. To prevent fraud, cardholders can choose how many PayPass purchases can be made before top-up is required through verified PIN code entry.

Have your say
How often do you use credit cards? Do you find them convenient? Are you happy with your credit card services and fees? Write to us at letter2editor@gulfnews.com or fill in the form below to send your comments.

Though I am working as a sales manager I have never had any credit card because I think people can't stop themselves using cards frequently and finally they put themselves in very big problems when they are unable to pay off the credit card.
Afaq
Dubai,UAE

I carry my credit card only when travelling or when making online shopping, because if I carry my card all the time in my wallet, I will use it for every single transaction. I am satisfied with my credit card services and fees. Credit cards are highly useful only if you have efficient control in using those cards.
Anisa
Dubai,UAE

I feel that is one is responsible enough to have several credit cards then he must be responsible enough to use it and settle its dues before being named and shamed by the bank. Enough of pointing fingers at banks, it is high time customers who are keen to obtain several credit cards and other liabilities took responsibility for their own actions or mess.
Frederick
Dubai,UAE

I use credit card for 60 per cent of my transactions. It is convenient, as there is no need to carry cash, especially in case of buying high-value goods. However, the charges/fees are high compared to other countries.
Prabhakar
Dubai,UAE