Use of payment cards in Oman is low but rising, following the launch of a number of Sharia-compliant products. The payment infrastructure is also improving, and various other initiatives are slowly leading consumers to abandon cash in favour of cards. Demand for premium cards is another key driver

se of payment cards is gradually rising in Oman, though overall card use is much lower than in many of its peers.
Frequency of use per card in Oman was 23.1 in 2015 – lower than the UAE with 47.6, Kuwait with 52.7, and Israel with 144.9. However, initiatives have been taken to encourage payment card adoption in the country, such as improvements to the payment infrastructure, the adoption of contactless and EMV, the introduction of Sharia-compliant cards, and a government push for electronic payments.

Preference for Sharia-compliant cards

The growth of Sharia-compliant banking has intensified competition in the domestic financial sector, leading banks to modify and improve product offerings.

To capitalize on the rising consumer preference for Sharia-compliant banking and payments, in December 2015 Bank Nizwa collaborated with MasterCard to launch a range of Sharia-compliant credit cards.

Al Hilal Islamic Banking Services launched a Sharia-compliant Visa credit card in November 2014, available in Signature and Platinum variants. Cardholders are offered benefits such as unlimited access to over 500 airport lounges worldwide, a 24-hour concierge service, up to 25% discounts at restaurants, and free medical referrals.

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The central bank introduced Islamic banking in 2012, granting financial institutions licenses to operate as Islamic banks. Islamic financial institutions, according to the central bank, are expected to account for 10% of Oman’s total banking industry by 2018, up from 7.5% in 2015. By the end of 2015, the combined network of Islamic bank branches was 60, including two banks and six banking windows in Oman.

Convenient and instant banking services

Along with an improved payment infrastructure, convenience of banking services is a key driver of the debit card market.

Bank Dhofar launched an instant card issuance service in September 2013, allowing customers to collect debit cards instantly when opening a bank account, and use them immediately. In June 2015 Alizz Islamic Bank launched an instant card issuance service at all its branches. The process helps to reduce PIN mailer distribution costs, and enhances customer satisfaction.

Bank Dhofar also introduced the Cardless Cash service in January 2014, allowing consumers to withdraw cash at ATMs without a debit card. Users log on to Bank Dhofar’s mobile banking app, select the Cardless Cash option, enter the account to be debited and create a PIN. The cardholder then receives a confirmation SMS with a reference code from the bank. Users then select the Cardless Cash option at an ATM and use the reference code and PIN to withdraw cash.

Rising preference for premium cards

Demand for premium payment cards is rising in Gulf countries, including Oman. Consumers have become more sophisticated, and cards are now an essential part of their lifestyles. Demand for high-quality services and rewards is also rising, and banks offer exclusive benefits and rewards for the most profitable consumers.

In March 2015 Alizz Islamic Bank introduced the World Elite MasterCard in Oman. The invitation-only card is offered to affluent consumers, and provides value-added services such as travel and lifestyle benefits, a concierge service and insurance.

Alizz Islamic Bank also offers the Titanium and Platinum MasterCard credit cards and Titanium MasterCard debit card, with a range of value-added benefits.