JEDDAH, 3 July 2005 — Saudi Arabia has accounted for a high growth in the usage of credit and debit cards against purchases in shopping malls, supermarkets and high-end outlets.
In fact, the Kingdom leads the GCC in the usage of credit and debit cards and has overtaken ATM withdrawals in some parts of the region, according to a survey.
Shopping spend during the year ended March 2005 passed the $10.5 billion mark, growing from the previous year by 32 percent. Saudi cardholders, who continue to be the region’s largest users of non-cash payments, generate more than one-third of this expenditure.
Everyday use of debit and credit cards in the GCC continues to grow strongly. For instance, for the 12-month period ended March 31, 2005, an average of 730,000 purchases were made per day on Visa debit and credit cards in the GCC - that is over eight transactions every second - and represents a growth of 30 percent from the same period in 2004. “This consistent trend will help boost economic growth in the region, since automated payments are more cost-efficient for economies than cash handling,” a senior Visa executive said.
“While the rise in volume and value of card payments is gratifying, what is perhaps more significant is that the majority of purchases being made by Visa cardholders in the GCC are everyday, small value purchases. This shows that cards really are starting to challenge cash in our society as the preferred way to pay,” said Visa International’s Middle East General Manager Kamran Siddiqi. “Consumers are increasingly opting for the ease, security and flexibility of payment cards over cash. These are the signs of a maturing market that will also support overall economic growth.”
Siddiqi added that markets such as the UAE are already showing clear signs of cards replacing cash. Numbers of purchase transactions by UAE cardholders were higher than the number of ATM cash withdrawals.
“Innovation and new technologies play a key role in making a cashless economy a reality. Our member banks have focused on bringing exciting products and technologies to the Middle East such as mini cards, money transfer solutions, multifunction chip cards, and loyalty offers, to meet the growing demand for simple, smart and secure payment alternatives,” he said.
Sounding positive about the increased migration toward chip technology, which is expected to redefine card security and consumer loyalty, Siddiqi said more member banks were expected to move to chip this year, in advance of the EMV (Europay MasterCard Visa) mandate set for early 2006.
According to Siddiqi, Visa International is a service association owned by, and comprising 21,000 member banks. These banks have issued over a billion Visa cards worldwide on which $3 trillion per year is spent across over 150 countries.
“Visa’s role is not to a make a profit but to provide payment solutions for its member banks, enabling them to issue cards and process merchants’ Visa card transactions,” he said, adding that the Visa products issued by the banks are safer, more convenient and more efficient than cash. Furthermore, they help to bring people into the banking system and to increase the funds available for commercial loans, the lifeblood of a growing economy.