Steady economic growth, a rise in the volume of the banked population and improvements in payment infrastructure drove the growth of Oman’s card payments channel during the review period (2008-2012). In terms of the volume of cards in circulation, Oman’s card payments channel posted a review-period CAGR of 14.26%. This was mainly driven by growth in the credit and charge card categories. The total volume of cards in circulation increased from 1.9m cards in 2008 to 3.3m in 2012. Over the forecast period (2013-2017), the card payments channel is forecast to grow at a CAGR of 5.22%, from 3.6m cards in 2013 to 4.4m in 2017.
Growth in payment infrastructure supported the increased payment cards usage
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The volume of point-of-sale (POS) terminals grew at a review-period CAGR of 16.11%, from 5.1m POS terminals in 2008 to 9.2m in 2012. The increased acceptance of cards at merchant outlets and an overall shift towards card payments through POS terminals resulted in an increase in transaction volumes.
To ATMs and POS terminal networks, the central bank of Oman (CBO) initiated a national payment switch: OmanNet in 2003 and completed the integration in 2011. OmanNet is integrated with the ATMs of all Gulf Cooperation Council (GCC) countries such as Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE. The growing volume of POS terminals and interconnected ATM machines across the GCC members is expected to drive card payments over the forecast period.
Banks are increasingly adopting contactless technology in association with Visa. For example, HSBC Middle East collaborated with Visa to issue Visa payWave debit cards. Although contactless cards penetration is in its early stages of development in Oman, over the forecast period it is expected to gain momentum.
Increasing competition among broadband service providers
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By GlobalDataOman’s rising volume of internet users is attracting a greater volume of broadband service providers; this has led to an increase competition and a reduction in prices. In 2012, 4G services were launched. E-payments are gaining momentum as broadband is made available at lower prices. In an initiative to enhance e-payments, Bank Muscat signed an agreement with the Ministry of Justice in 2009 to initiate e-payment facilities for judicial services rendered at courts and public offices. The increasing popularity of e-payments is expected to drive card payments over the forecast period.
Periodical promotions and marketing campaigns to drive card payments
Although cash continues to be an important part of the overall payments system, it is increasingly being displaced by the card payments channel. To capitalize on consumer preferences, banks and card issuers have adopted various marketing strategies to encourage customers to increase card payments. Common strategies include offers, product discounts, reward points and insurance coverage. Banks are also rewarding their customers through monthly raffle draws. One of such programs is HSBC Bank’s Mandoos Savings scheme under which its cardholders are rewarded certain cash prizes for maintaining a minimum balance on their saving accounts.
