There are no points for guessing where credit cards originated – it was in the United States as early as the 1920s. The universal credit card, like the one we know now, came into existence when Diners Club Incorporated introduced it in 1950.
This was followed in 1958 by another card of this type, then known as a travel and entertainment card, issued by the American Express Company.
Major credit cards such as those of Visa, MasterCard and Barclaycard found their way into people's wallets by the end of the 1970s. And in the 80s, as American businessman Jim Cramer commented, "Credit cards were made in the '80s to be a people's form of capitalism."
Over the past two decades, as economies all over the world developed, more new products related to credit cards including privilege or loyalty cards, were introduced.
Today, the credit and privilege card industry is a multibillion dollar one with banks, airlines and retailers incorporating them with enhanced benefits and several factories producing them.
Though international banks have been in the UAE for more than three decades, it is only in the past 10 to 15 years that increased spending capacities have made credit and privilege cards popular among the different sections of the society (see table on page 3).
Now national banks and finance institutions are as much or more in the fray than international banks for the custom of the residents of the UAE, who receive remarkable, tailor-made card advantages along with services that suit their lifestyle.
Visa Inc. operates the world's largest retail electronic payments network and is one of the most recognised global financial services brands.
Visa offers a range of branded payment product platforms, which its financial institution clients use to deliver credit, debit, prepaid, and commercial programmes to their customers.
Visa's global network, VisaNet, delivers value-added processing services, including fraud and risk management, dispute resolution, rewards and other business-enhancing applications.
Together, these elements provide secure, convenient and reliable payment options in 170 countries and territories. The Visa family of global payment brands including Visa, Visa Electron, PLUS and Interlink, enjoys unsurpassed acceptance worldwide.
MasterCard offers its users the convenience and security to pay at more than 22 million locations worldwide.
Customers' banks can guide them towards the right card for their needs and lifestyle. The MasterCard card thereby becomes the optimal way to pay, not only when travelling abroad, but also when enjoying a meal at a restaurant, doing some shopping, or paying for day-to-day purchases.
Almost all major banks in the UAE have linked their credit cards to Visa and/or MasterCard, much to the convenience of their clients here. And more new products matching the needs of the customers are being launched regularly.
Emirates NBD, the largest national bank in the UAE, offers credit and debit cards to their customers. Including both Visa and MasterCard, Emirates NBD credit cards make shopping easy with acceptance at more than 30 million outlets worldwide and added benefits such as free travel insurance, global emergency assistance and more.
As current trends go, there seems to be a strong interest emerging in card products leveraging contact-less technology. "This provides benefits to both card users as well as accepting merchants in terms of speedy authorisations.
Emirates NBD was among the first banks to launch
a co-branded credit card with Dubai Internet City leveraging MasterCard PayPass contact-less platform," says Suvo Sarkar, Emirates NBD General Manager-
Retail Banking.
According to Sarkar, the share of payments made on cards in relation to total personal consumption expenditure of consumers is increasing.
"Customers are now more open to using their credit or debit card even for their day-to-day expenses as opposed to paying by cash. In this context the contact-less platform has a big role to play in promoting card usage at super markets and fast food/quick service restaurants.
Also with the upcoming Dubai Metro project, contact-less technology will be in the forefront of many exciting innovations to provide convenience for a variety of payments," says Sarkar. The concept of points-based loyalty cards with a reward and redemption feature is becoming increasingly common.
It is proving not only very successful but also helpful in building a relationship between customers and the card provider by generating repeat business. A number of exciting products are already present in the loyalty card industry.
There are cards that reward you if you fly a certain airline or shop at different outlets or shopping malls. Skywards is the frequent flyer programme of Emirates airline.
Skywards Miles is the reward currency earned when Skywards members fly with Emirates or any of its partner airlines. Miles can also be earned through the hotel, leisure and lifestyle, financial and car rental partners of Emirates.
Skywards is constantly improving its rewards and benefits to customers. Brian Labelle, Senior Vice President, Skywards, says, "To ensure the success of the cards, loyalty programmes look towards customers' daily activities and aim to provide relevant products. For the frequent flyer industry one very successful product is the tie-up with credit cards.
With this partnership a member can be rewarded for any purchase they make on their credit card. "Skywards recently launched a fully Sharia compliant card available to UAE residents, which offers a very competitive earning rate."
Constant review of the product offering is essential to ensure that a programme meets customer expectations and maintains the relationship.
Personalisation and member recognition is key for the future. Any new product offerings will have to meet the customer demand in these two areas," says Labelle.
Air Miles, which has been successful, becoming one of the most exciting customer loyalty programmes in the world, is now a huge success in the UAE too.
It gives holders free fabulous rewards, such as travel, accommodation, electronic products, movie tickets, theme parks, fragrances and more for simply doing what everyone does most often here – shopping!
Dave Battiston, CEO of Air Miles, says that the latest development in the loyalty card industry is the increased understanding players have about consumer behaviour using SKU (Stock Keeping Unit) level data analysis.
"This will allow us to profile shopping trends by analysing individual customers' spending habits. We as Air Miles can then share this consumer intelligence with our partners so that together we can communicate more effectively with consumers in the market. Our partners at Nectar in the UK have already used this extensively, and we look forward to building on their expertise in the Middle East region.
"The possibilities SKU level data brings us are endless and it will continue to be the new generation of marketing facilitating real one-on-one loyalty marketing. Fully understanding the consumer, then targeting them with relevant and timely offers and promotions will make all marketing activity more effective.
This is a win-win for all parties – it is cost effective for any business, response rates will soar and most importantly consumers will receive communications that are totally relevant to their needs," Battiston adds.
Vice Versa International, which aims to create loyalty and incentive solutions connecting enterprises and individuals more effectively, has developed and wholly owns a unique loyalty and incentive solution based on smart chip technology.
Vice Versa principle allows a card user to earn rewards and redeem them instantly. By translating the rewards into local currency, and by utilising the real-time read/write capabilities of the smart chip, Vice Versa card users can literally make money as they spend money.
According to Ole Milan, Co-Founder, Vice Versa International FZ-LLC, the most exciting development in the loyalty card industry is the ability to utilise technology to connect consumers and businesses in a win-win situation that enhances the overall shopping experience.
"When directly asked, consumers favour transparent instant cash-rewards, preferably across categories that provide freedom of choice. The data collected provides the opportunity for targeted communication and relevant offers," Milan says.
"The consumer's quest for maximum, relevant, transparent and instant Cash Rewards will continue on the expense of points, miles and limited options for redemption.
In future well-known technologies such as the internet as well as newer technologies such as mobile and near field communication will be more and more utilised, and the data captured will help to customise the experience even further, all for the benefit of the consumer.
If it works for the consumer it will work for the businesses as well," says Milan. Industry experts predict that the conjugal relationship between credit and privilege cards seem all set to bring customers more smart advantages than ever before. So all you have to do is just use those cards – wherever you are and whatever you need to get!
