The Middle East has traditionally favoured cash over other
payment methods. In some markets that situation is changing, as
governments and the financial industry move to promote card
adoption. As use grows, opportunities for both domestic and foreign
issuers look attractive. Sarah Williams

The Middle Eastern cards markets of Egypt, Bahrain, Saudi Arabia
and the United Arab Emirates (UAE) are all evolving; however, each
is very distinct, with different levels of market maturity, product
penetration, card use patterns and demographic profiles. For
example, penetration of credit cards ranges from 59 percent in the
UAE to a mere 1.9 percent in Egypt. There is certainly ample
opportunity for future growth across the entire region, as around
90 percent of all purchase transactions are still made with


Egypt is still largely a cash-based economy. Although both debit
and credit card payments have increased in popularity over the last
few years, their use remains limited compared with neighbouring
countries. Recent statistics show that around half the adult urban
population in Egypt still do not engage in bank transactions, with
the proportion being much lower in rural areas. Even among urban
dwelling adults, only 17 percent actually own a credit card and,
according to some estimates, as many as 97 percent of Egyptian
employees still receive their salaries in cash.

The majority of Egyptian employees who are paid via bank accounts
often withdraw their whole salary on payday, with only a narrow
segment of them (usually top managers) leaving an amount in their
accounts. Only a small proportion of the population uses

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Although Egypt is the region’s most populous country, it is
estimated that as of 2007, only 3.2 million Egyptians own debit
cards and only 1.5 million credit cards are in use.

Attempts have been made to increase card transactions. For example,
many government and public sector employees in various departments
now collect their salaries from ATM terminals using Visa salary
cards. In 2004, a national network interconnecting all Egypt’s ATMs
and POS terminals was implemented. In August 2007, Visa
International announced the launch of its responsible credit
education campaign. The campaign is a cornerstone of Visa’s wider
objective of promoting financial literacy. It aims to share advice
with the public on financial management skills and how to make the
most of payment cards.

Issuers and government alike acknowledge the need to further
develop the banking and payment infrastructure so as to enable
citizens to move money quickly, safely and flexibly through
electronic channels. In 2006, Giro-Nil, also known as the Egyptian
Company for Automated Bill Processing Systems, was formed. It is a
public-private venture of Banque Misr, Egypt Post, Commercial
International Bank (CIB) and Dutch bill processing specialists
Inclusion Group. The aim of Giro-Nil is to introduce one common
backbone infrastructure for bill and salary/pension processing to
serve all banks and their commercial clients and without involving
cash transactions. Giro-Nil aims to reduce the costly physical
movement of cash for salaries and bill payments.

Giro-Nil represents a major push to reduce cash transactions in
Egypt, although its partners concede that Egyptians’ general
distrust of banking is a big hurdle to overcome. However, anecdotal
evidence suggests that attitudes are changing. Banque Misr, for
example, has indicated that its experience with its salary card
suggests that, as customers grow to understand and trust the new
service, they will leave a balance in their account.

Turning to card schemes, Visa has indicated that in the year ending
September 2006, the number of Visa credit cards in Egypt rose by 24
percent and the number of debit cards by 61 percent. Over the same
period, Visa’s retail sales value increased by 22 percent,
according to Egypt’s Daily Star newspaper. The total number of Visa
transactions in Egypt grew by 41 percent over the 12-month period
ending September 2006 and the value of these transactions grew by
42 percent to reach almost $1.5 billion. These represented
significantly higher growth rates for Visa than its other Middle
East businesses. The number of Visa ATMs in the country grew by 15
percent over 2005-2006 to reach more than 1,700 machines. This
total is second only to the number of ATMs Visa has in Saudi

Competitive environment

The biggest banks in Egypt include National Bank of Egypt, Banque
Misr and Banque du Caire. NBE issues a variety of credit and
instalment cards, with total credit lines of EGP3.7 billion ($661
million) as at 30 June 2006, up 13.5 percent from the year-ago
period. As of 2006, NBE had 401 ATMs and 5,590 POS machines, up
32.3 percent and 18.2 percent, respectively, on the previous year.
NBE issued around 538,700 credit and instalment cards to the end of
June 2006, up 45.2 percent over the previous year. The bank also
issued 1.15 million debit and prepaid cards, a year-on-year growth
rate of 41.7 percent.

Economic difficulties and a decline in foreign currency reserves
have dissuaded foreign banks from entering or investing in the
Egyptian banking sector in recent years. However, Barclays is a
presence in the market via Barclays Bank Egypt, the Greek bank
Piraeus Bank has a 69.3 percent stake in Egyptian Commercial Bank
(now Piraeus Bank Egypt) and National Société Générale Bank is a
subsidiary of its French parent. Barclays was traditionally known
as a corporate bank in Egypt but in recent years has been actively
expanding it retail banking operations with the introduction of new
products and services. Barclays claims to be the market-leading
issuer of credit cards in Egypt as of September 2007, with a market
share of 60 percent of all new cards issued in the country every


Bahrain is a small but sophisticated cards market. The country has
a population of just over 700,000, of which a full one-third are
non-nationals, but GDP per capita is high at $25,800. The maturity
of the Bahrain market has meant that many innovative programmes
have been introduced to entice customers, many of whom are frequent
travellers. Recent launches in the Bahrain cards market include the
April 2007 joint promotion between American Express and Qatar
Airways, during which American Express cardmembers based in Bahrain
received a discount of up to 15 percent on Qatar Airways flights
departing from Bahrain.


Similarly, in July 2007, Ahli United Bank (AUB) of Bahrain and
national air carrier Gulf Air formed a regional strategic alliance
to reward AUB credit card customers with Gulf Air frequent flyer
miles through the AUB Pearl Rewards Loyalty programme. The alliance
spans the Middle East region to include all AUB’s subsidiary and
associate banks’ credit cardholders in Bahrain, Kuwait, Egypt and
Qatar. AUB has also launched an EMV-compliant credit card in
Bahrain, incorporating benefits such as a 12 percent family
discount on flight tickets with Emirates Airlines purchased with
the cards, following a deal between AUB and the Dubai-based
carrier. AUB will issue smart chip replacements cards for existing
Visa and MasterCard gold and classic credit cards.

In early 2007, Al Salam Bank Bahrain announced that it is launching
what it calls Bahrain’s first EMV-compliant smart ATM card this
year. Incorporated in January 2006, the bank operates under Islamic
principles in accordance with regulatory requirements for Islamic
banks set by the Central Bank of Bahrain.


In February 2007, American Express Middle East launched an enhanced
version of its Blue credit card in Bahrain, featuring a new
translucent design, an embedded smart chip, a new Value Back
loyalty programme and cashback. The new card is aimed at the ‘young
at heart’ customer.

Japanese card consortium JCB has targeted the Middle East as a
prime growth market. In May 2005, JCB International signed a card
issuing licence agreement with CrediMax BSC, the leading credit
card company in Bahrain. This deal marked the first time that a JCB
card was issued in local currency in Bahrain. As of 2006, CrediMax
had a network of 3,500 merchants, covering 85 percent of the
country’s total credit card merchants.

The move to EMV

Authorities in Bahrain have taken a number of steps to reduce card
fraud. In late 2005, the Central Bank of Bahrain (CBB) launched an
initiative with the Bankers’ Society to reduce ATM-related fraud
after attempts by criminals in many countries to clone debit and
credit cards or engage in identity theft. Retail banks were
required to install fraud detection and inhibiting (FDI) devices
and technology in ATMs and to increase the quality and quantity of
CCTV monitoring and daily checking of ATMs by staff.

In early 2006, following joint meetings with the Bankers’ Society,
the Benefit Company and Ministry of Interior officials, banks began
accelerating programmes to move away from magnetic strip security
on debit/credit cards towards EMV chip and PIN technology to
enhance customer security and reduce the opportunity for card
fraud. Banks were given deadlines for the installation of FDI
measures and the issuance of EMV-compliant cards of end-September
2006 and end-December 2007, respectively. Banks successfully met
the first deadline and are working on the second.


Of Saudi Arabia’s population of 27.6 million people, 8 million are
estimated to have bank accounts. Out these, around 7.5 million use
debit cards, but only around 1.2 million have credit cards. In
terms of credit card use, a recently released MasterCard survey of
consumer confidence showed that in Saudi Arabia, cardholders spend
more on small- and medium-size transactions and use their credit
cards fewer than five times a month, unlike cardholders in the UAE
and Kuwait who use their credit cards more frequently.

The Saudi Payments Network (SPAN) is the national ATM and POS
network connecting all Saudi banks and providing a common service
point. SPAN’s other services include the support of international
association transactions, such as Visa and MasterCard, originating
either within or outside Saudi Arabia. SPAN has direct connections
to these associations and provides that connectivity in a
pass-through mode to the Saudi banks. This support includes a full
range of credit and debit card transactions at both ATM and POS

Competitive environment

The banks with the largest retail banking operations include
Al-Rajhi Bank, National Commercial Bank, Arab National Bank, Riyadh
Bank, Saudi Hollandi Bank and Samba Financial Group. According to
the company, Samba’s cards-in-force base grew by 49 percent over
2005-06 while its asset book grew by 33 percent. Samba claims to be
the first credit card issuer in the country to tie up with Sadad, a
payment gateway network, to enable customers to pay anywhere, any
time. Samba was the first to introduce the concept of rewards for
Islamic credit cards. Net loans and advances on its credit card
business amounted to SAR1.478 billion in 2006.


In 2006, Al-Rajhi bank began offering Visa Infinite cards in the
Saudi market; fee income from its credit operations amounted to
SAR93.4 million in 2006. National Commercial Bank was the first
Saudi Bank to launch credit cards for settlement of online
purchases. NCB’s net loans amounted to SAR1.1 billion in 2006.
Products offered by NCB include the Tayseer Al Ahli Titanium
MasterCard, Al Fursan Credit Card (co-branded with Saudi Arabian
Airlines) and a prepaid Sharia-compliant card.



The UAE is more mature than most other Middle Eastern markets in
terms of card penetration, acceptance and state-of-the-art
infrastructure. Despite a population of only 4.4 million, the UAE
has 2.4 million credit cards in circulation and 2.2 million debit

This gives it one of the highest penetration levels of cards in the
world and the population of the UAE in fact hold about one-third of
the credit cards in the entire Middle East region, according to

As of 2007, the National Bank of Ras Al-Khaimah (RakBank) estimates
that the credit card market in the UAE is growing at a rate of 15
to 20 percent a year. In terms of the average monthly spending on
credit cards, only 6 percent of cardholders in UAE have an average
monthly spend of below $35, while 58 percent of cardholders have an
average monthly spend of over $300.

However, standards of living in the UAE vary significantly between
non-nationals and the native population, and it is estimated that
about 54 percent of the total population is unbanked. Non-nationals
play a huge role in the economy of the UAE, comprising almost
three-quarters of those in the 15-64 age group. There is believed
to be room for further strong growth in the cards market as the
country still remains predominantly cash-based.

All ATMs in the UAE are interconnected via UAE Switch which
connects to the ATM networks of its fellow Gulf Co-operation
Council member states (via the GCCNet ATM network) in addition to
Lebanon and Egypt. The availability and use of ATMs in the UAE has
increased rapidly in recent years.

Competitive environment

The cards market in the UAE is very competitive and banks are keen
to increase their market share as the margins are higher than other
retail products. The UAE credit card market has grown substantially
in recent years, with many banks reporting a double-digit increase
in their customer base.

Major issuers in the UAE cards market include RakBank and
Mashreqbank. The latter has the largest customer base in the UAE
and is the largest privately owned bank in the country. Mashreqbank
was the first bank to launch credit cards in the UAE and it has
identified cards as a growth engine for the next few years. The
bank’s card offerings include the mc2 VIP Mashreqbank black
platinum credit card.

Foreign entrants have also arrived in the UAE. In February 2007 GE
Money EMEA signed a strategic joint venture agreement with the
Al-Futtaim Group, one of the UAE’s leading privately owned
enterprises. The joint venture is aimed at facilitating the entry
of GE Money into a new market and the wider Middle East region, and
the expansion of the range of services and activities of the
Al-Futtaim Group in the UAE. In June 2007, Barclays Bank launched
its retail banking services in the UAE. Barclaycard will launch a
range of credit cards that allow customers to choose the level of
repayments and rewards they can earn.



UAE product and service developments

The already high penetration of credit cards has led issuers to
introduce new products to the mature market. As far as the expat
market is concerned, the UAE offers lucrative opportunities for
card issuers, since expats are far higher users of payment cards
than the native population and they undertake a large amount of
international travel.

 The UAE market also offers several credit cards aimed at
specific customer segments. In April 2007, Emirates Islamic Bank
launched the first Visa Infinite card in the UAE market. The card
is aimed at high net worth individuals. Other examples include ABN
AMRO’s Al Ameera card for women, Standard Chartered Bank’s
Manhattan credit card for the young and upwardly mobile, the
MasterCard Golf Gold, MasterCard Cricket, the MasterCard Soccer and
the Visa Marathon for sports enthusiasts.

American Express is aiming its Blue Card at young professionals in
the UAE and offers a co-branded BMW card to elite customers.

The large size of UAE’s large non-national population has led ABN
AMRO to launch a credit card aimed at the large number of
non-resident Indians in UAE, in association with MasterCard. The
credit card offers a number of services, including free monthly
money remittances and life insurance that offers protection for the
cardholder’s family, along with a host of India-specific redeemable