Demand for premium cards rises in the UAE

We find symbols of wealth in everything we possess, such as the watches we wear, the cars we drive and the homes we live in. So, it’s no surprise that the credit cards in our wallets also allude to our ability to spend. The credit-card industry has witnessed significant and steady growth over the past few years, and leading UAE banks have launched so-called elite credit cards targeting a niche group of affluent clients.

 

Mashreq’s fastestgrowing credit cards are not the cheapest or the most freely available. In fact, they are the exact opposite. Those interested in applying must earn a minimum of Dh25,000 a month for its standard prestige card or Dh50,000 for its top-tiered card and pay an annual fee of Dh1,500.

 

“We have seen a significant growth in the take-up because we are adding a lot of benefits that suit the lifestyle of this target segment,” says Pankaj Kundra, Head of Payments at Mashreq.“So we are growing much faster in this segment compared to any other.”

 

Generally, prestige cards require a minimum salary of Dh15,000-Dh20,000 and include high fees, but often come with big benefits.

 

“These include global airport lounge access as well as meet-and-greet services at airports,” says  Ambareen Musa, Founder and CEO of price-comparision site Souqalmal.com. “They offer international concierge services, which provide 24-hour personal assistance. 

 

“With just a phone call you will be assisted with your dinner and travel reservations, chauffeurs and taxis, car rentals and gifts. They have an extensive miles programme, which enables customers to earn miles on their spends and redeem for airline tickets. 

 

“They also offer discounts on cinemas, shopping and golf and hotel privileges.”

Price comparison websites like Souqalmal have recorded an increase in the take-up of prestige cards in recent months. Both Souqalmal, which has seen a 60 per cent increase in traffic in the first quarter of 2016 compared to the same period last year, and rival Compareit4me.com have registered growth in the sector. 

 

“We have seen a growth in the number of high-salary earners visiting our site, [with] 30 per cent of the users earning Dh30,000 plus,” says Sonja Stephen, Editor at Compareit4me.com. “That means we have also seen a growth in the take-up of prestige cards.” Souqalmal estimates prestige cards constitute about 18 per cent of the total credit cards in the UAE. And the number keeps on growing. 

 

That is perhaps no surprise given the growth in private wealth in the UAE, which has outstripped that in the rest of the countries in the Arabian Gulf over the past four years, according to consultants Strategy&. While wealth in the region grew at an average rate of 17.5 per cent a year from 2011-15, the UAE witnessed an annual rise of 25 per cent. 

 

And more money means more potential prestige customers and more cards. Citi became one of the latest to launch a prestige card in the UAE four months ago. “We have seen many new credit cards launched in the market targeted towards the affluent segment,” says Devendar Agarwal, Director and Business Head for Credit Cards, Loans and Mortgages in the Middle East for Citibank.

“However, Citi Prestige  provides benefits such as fourth night free stay, miles transfer to multiple airlines and complimentary golf internationally.”

 

Citi Prestige is aimed at affluent people aged between 35 and 55 who earn more than $100,000 (Dh367,000) a year and are frequent travellers who take an average of six to 12 trips a year. “Given Citi’s strong international presence, it is in the unique position to deliver on the needs of the affluent global citizen with the industry’s first truly global card,” says Agarwal. 

 

Travel and golf are key features of Mashreq’s prestige cards. “We have reviewed key motivators or spending patterns of the segment and we have seen the large part of their spend happens on travel and entertainment and they are all into fine dining restaurants. 

“So we ask what do they do and then build the credit card around them,” says Kundra.

 

He puts on average about 60 per cent of the spend on the card within the UAE, while the rest comes from abroad. “[Cardholders tend to] just use the card and pay us at the end of the month and don’t really pay us any interest. [They] are not really credit-hungry people. They settle at the end of the month. 

 

“The only way the bank makes money is because a lot of these guys are travelling, so international spend [through foreign currency mark-up fees] is a lot. 

 

“If they were not doing any international spend, it would be a loss-making card actually.”