Visa ME posts robust growth for first quarter of 2003 with high debit card usage

For the first quarter of 2003, total Middle East cardholder transactions rose by 25 per cent to 11 million from 8.8 million for the first quarter of 2002. For the total 12-month period ending 31 March 2003 transactions totalled 186 million compared to 140 million for the same period in 2002. Similarly, the total expenditure rose by 29 per cent from $32.7 billion as at 31 March 2002 compared to $42 billion as at 31 March 2003.

Peter Scriven, Visa's General Manager for Middle East commented on the results: "Despite the economic concerns associated with the conflict in Iraq and the outbreak of SARS in the early part of 2003, Visa has, once again, achieved phenomenal results. This is not entirely surprising as currently the majority of our card usage in the region is for domestic expenditure, which can be attributed to the extensive use of Visa debit cards such as Visa Electron, cancelling the myth that Visa is just a credit card used for travel and entertainment expenses."

In the Middle East, Visa debit cards are increasingly used for daily spending, generating over US$38 billion in expenditure for the year ending 31 March 2003 - a 30 per cent rise over 12 month period from 31 March 2002. This accounts for over 90 per cent of overall spending by all Middle East Visa cardholders during the same period.

Scriven explains the growth trend: "More and more banks are introducing Visa Electron to their customers in replacement of their proprietary ATM-only cards.

"Visa Electron has a dual function; it not only provides national and international cash access through Visa's unrivalled global network of more than 800,000 ATM machines, but Electron cardholders can also use their cards when shopping in the same way as a credit card, but with the transaction being debited directly to their bank account. This enables the cardholder to manage and regulate funds more efficiently and to use their Visa Electron card for everyday shopping around the world."

Today, debit cards make up approximately 85 per cent of all Visa cards in the region and are ideally suited for every day payments. Visa's latest results on debit card usage also show a strong shift towards retail spending and a move away from cash withdrawals. The number of debit card transactions made at petrol stations, supermarkets, restaurants, and other shops have taken the lead over credit card payments, representing 53 per cent of all Visa transactions made at point of sale locations.

Scriven explained that typically new debit cardholders start by withdrawing cash, then progress to using plastic for traditional cash transactions such as food, petrol and household goods. "Now, people are using debit cards such as Visa Electron to pay utility bills and medical bills, and debit card spending in outlets such as book and record stores is now an everyday event."

Debit cards such as Visa Electron, are linked to a customer's bank account, enabling cardholders to access their funds through ATMs, at shops with electronic sales terminals, and over the Internet - with no interest charged. Funds are automatically deducted from the customer's account as soon as a purchase or cash withdrawal has been processed, and monthly bank statements provide a record of all transactions, giving a clearer picture of expenditure than cash ever can.

"Visa Electron is truly a global payment instrument and far more convenient than using cash or cheques. I am sure that it is this level of convenience that has accounted for the huge growth of Visa Electron throughout the Middle East," concluded Scriven noting that regional consumers are growing rapidly both in numbers, due to high population growth and in sophistication.

"We are confident that the region will continue to witness further growth in Visa debit card usage as cardholders further understand the benefits of cards over cash."