ME consumers show preference for cards over cash

Official figures issued by Visa International report a 41 per cent increase in card sales expenditure for the 12-month period ending December 31, compared to that of 2002.

Annual cardholder sales volumes for credit and debit cards nearly touched the US$8 billion mark representing a new record for the region and a clear move away from cash. Figures also showed a 36 per cent increase in Middle East Visa card usage at points of sale, markedly demonstrating the shift from use of cash to card payments, for everyday items.

Khamis Buharoon Al Shamsi, Head of Domestic Banking Division of National Bank of Abu Dhabi and UAE-based member of Visa International's Board of Directors for the CEMEA region, said: "Clearly, consumers are increasingly choosing to take advantage of the convenience and security of electronic payments. We expect this trend towards cashless payments to grow as consumers become more sophisticated and market acceptance expands."

While the use of cash still dominates spending patterns, the proportion of card transactions at point of sale versus cash withdrawals in the region, increased significantly, indicating that consumers are increasingly aware of point of sale electronic payment facilities.

Al Shamsi attributed the growth to the increased relevance of cards. "A few years ago card use was largely confined to international travel and cash withdrawals. Over time there has been a steady growth in Visa retail purchases as people now rely on their cards for every kind of spending," he said.

Kamran Siddiqi, General Manager Middle East for Visa International noted that the trend bodes well for regional economies given the correlation between greater electronic payments and growth. "Moving away from cash to automated electronic payments not only boosts bank deposits, thereby increasing the money available for commercial loans in the region, but also creates greater transparency and accountability which, in turn, leads to stronger efficiencies and economic performance."

Siddiqi also commended the ability of Visa member banks to deliver sophisticated products and services to suit modern payment needs as a key contributor to increased card payments. He noted that 2003 was an eventful year with a series of 'firsts'. These included the launch of University Visa cards in Bahrain and the UAE, the introduction of the first prepaid card in Kuwait and Jordan, the launch of the first Islamic credit card and the first money transfer card in the UAE. On the technology front, Saudi Arabia took the lead with the first chip card in the Middle East and became the second e-commerce acquirer providing the 'Verified by Visa' e-security solution, Siddiqi pointed out.