Lebanon has witnessed impressive cards sector growth in recent years driven by a surge in the popularity of prepaid cards – and the 2014 launch of contactless technology is providing a further boost
Lebanese payment cards (including debit, credit and charge cards) registered positive growth during the period from 2009-2013,recording a compound annual growth rate (CAGR) of 3.41%, increasing from 1.6 million in circulation in 2009 to 1.8 million bythe end of 2013.
In terms of transaction value, payment cards registered LBP15.5trn ($10.3bn) in 2013, a 12.07% increase in CAGR between 2009 and 2013. The introduction of improved card technology, rising consumer awareness of electronic payments, the adoption of advanced technologies such as Pay-Wave and PayPass feature, EMV technology, and contactless cards all contributed towards the growth in payment cards.
In 2013, the average transaction value (ATV) in Lebanon was $177.6, which was the fifth-highest in the Middle East and North Africa (MENA) region. Kuwait recorded the highest ATV, with $319.6, followed by the UAE ($263.1), Oman ($207.1) and Bahrain ($185.3).
In terms of card penetration, Lebanon had the ninth-highest level of 0.4 cards per inhabitant. The highest was Iran (2.4), followed by the UAE (2), South Africa (1.3), Kuwait (1.3), Israel (1.1), Oman (1), Bahrain (0.8) and Saudi Arabia (0.7).
Lebanon ranked seventh among the other MENA countries in the frequency of use of payment cards, with 31.9 transactions per card. Israel recorded the highest frequency with 131.2, followed by Saudi Arabia (95.3), Kuwait (47.4), Iran (46.5), the UAE (43.1) and Nigeria (38.2).
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Prepaid cards market has significant growth potential
The prepaid cards market is growing rapidly, and is expected to surpass debit, credit and charge cards in terms of the number ofcards in circulation by 2018. In terms of the number of cards in circulation, the prepaid cards market in Lebanon increased, with
107,702 cards in circulation in 2013, which is anticipated to increase to 2.3 million cards by 2018.
In terms of transaction value, the prepaid cards market recorded a CAGR of 49.09% from 2009-2013. The value of open-loop prepaid card transactions increased at a CAGR of 53.68%, while closed-loop increased at a CAGR of 45.37%.
To promote such cards, Byblos Bank and BLOM Bank are offering cards at different prices ranging from LBP12,060 to LBP376,875, targeting the young population (from the age of 12 years) and regular internet surfers who prefer to make purchases online. These cards include offers such as the redemption of reward points that are attached to them.
Prepaid cards are also popular for the remittance facility. IRemit, a global remittance company, issues the I-remit Visa prepaid card which ensures faster and safer remittance facilities from Lebanon to beneficiaries in the Philippines.
The card also offers facilities such as online payment for utility bills and online shopping.
Improving infrastructures to accelerate online transactions
In 2013, the Ministry of Telecommunication signed an agreement with Cyprus Telecommunications Authority (Cyta) to share 24% of cable capacity on Cyta’s Alexandros international submarine cable subsystem. This allowed Lebanon to use an additional 700Gbps of bandwidth alongside the existing 200Gbps. This broadening of telecomnmunication infrastructure is expected to reduce broadband costs and increase the volume of online transactions, thus facilitating card payments.
68.5% of the total Lebanese population is working class, who, as a group are more active on the internet. As the internet and mobile penetration rate increase, there’s a strong inclination towards mobile devices and media usage, giving a platform for e-commerce companies to reach more potential customers. Growth in online shopping is expected to create opportunities for growth in the cards and payments industry.
Emergence of contactless technology
Smart cards with contactless technology features are an emerging trend across the globe, and the same is true in Lebanon.Contactless technology was introduced to the country in association with Visa. Bank Audi and Visa launched PayWave contactless payment technology on 1 June last year, and the bank also issues cards with PayPass contactless features in association with MasterCard.
Similarly, contactless technology is being used for mobile payments. On 15 April last year, Bank Audi launched the Tap2Pay NFC Mobile Payment service, which allows mobile phone users to use their phone as a credit card. This was launched in partnership with MasterCard and the mobile operators Alfa and Touch.
E-commerce recorded significant growth during the period 2009-2013 due to rising online and mobile penetration, increasing consumer confidence in online transactions and the country’s increasing presence of online gateways. The increasing young and urban populations are more inclined towards the use of mobile devices, which provide an opportunity for e-commerce companies to reach a greater number of potential customers.
Banks are introducing e-commerce programmes which offer advantages to consumers and merchants that will help the e-payment method to grow in future. Bank Audi and Credit Libanais are the two banks in Lebanon that have introduced e-commerce programmes in partnership with the Net Commerce online payment gateway.
The Audi e-payment from Bank Audi is an internet gateway which provides merchants with a secure payment processing service. The eBLOM online payment gateway offered by BLOM Bank also offers services to customers.
Increased security measures for cards
Card fraud in Lebanon increased to LBP6bn in 2013. A few commercial banks have implemented advanced technologies such asEMV chip-based technology, Smart ATMs and Tap2Pay contactless feature to combat fraud. Bank Audi, for example, introduced
PayWave technology in debit cards which have a contactless payment feature.
Introduction of cards targeting specific customer segments
To increase the card market, banks are focusing on a greater level of customer segmentation in an attempt to target specific
consumer demographics. Banks are offering cards which are targeted at specific groups, such as frequent travellers, regular internet
surfers and high net worth individuals (HNWIs). For HNWIs, Bank Audi, for instance, offers a Platinum and Eurozone card while Byblos Bank offers the World Elite MasterCard. The Ultimate Cedar Miles card is issued by Bank Audi for those who travel frequently.
Furthermore, there are cards such as MasterCard Shine and the Ladies First card, which both target female consumers, offering
discounts on shopping, beauty treatment and health care.
The BLOM Shabeb and the University smart card target the young sector of society.
At a corporate level, these cards are effective for meeting a firm’s purchasing needs with flexible repayment options. Such cards include MEA Visa Corporate cards, MasterCard Business and Visa Business credit card.