JEDDAH, 1 July — Saudi Arabia was once considered to be “far behind” many other advanced countries in the use of plastic currency. This was substantiated by a claim that 97 percent of business, commercial and shopping transactions in the Kingdom were done by cash and only three percent by credit or debit cards.
“But the situation is no more the same. The Kingdom has in the recent past been a rapidly growing market for plastic currency,” Peter J. K. Scriven, general manager at the Dubai-based Visa International, CEMEA, said in an interview.
Emphasizing that the plastic card culture is rapidly growing in this part of the world, he said: “Whereas in 1995 there were only 400,000 credit cards with a turnover of $1.1 billion in the Kingdom, the Middle East’s largest market now had almost two million cards with a total turnover exceeding $12.6 billion “There was a 37 percent turnover growth in the Kingdom for credit/debit cards last year against the world growth averaging 20 percent.”
Scriven, who was here to meet with top executives of Visa’s nine-member banks, said his interaction with the bankers and also with some of the merchant outlets showed that there was a “good card acceptance” ratio. According to him, there are 31,000 merchant outlets and 2,000 ATMS all over the Kingdom where the cards are accepted.
“In fact, the Kingdom’s turnover per card per annum is $7,200, which is among the highest in the world. Also, Saudis conduct more Visa card transactions in the US than anywhere else in the world, with as many as 42,911 transactions equating $9.70 million,” he added.
Globally, Visa had over one billion cards in circulation issued by more than 21,000 member banks, which can be used at over 22 million merchant outlets in over 200 countries, Scriven said emphasizing: “With Visa you remain closest to the truly global payment currency. In fact, the Kingdom has one of the most advanced payment acceptance networks in the world, thanks to Saudi Arabian Monetary Agency (SAMA), and also a very intelligent target market for payment cards. It has capability and capacity for early adoption of new technology. Even the use of Internet and mobile phones coupled with the level of education has also had a marked growth, yet the biggest challenge of all is the strong tradition of cash transactions. So cash is the biggest competition for plastic currency. There is therefore an urgent need to change payment habits in this part of the world.”
Scriven added: “With the current globalization trend, the day is not far off when cash will not be easily acceptable. For instance, hotel bookings in Europe and America cannot be done without plastic cards. So plastic payment cards are going to become even more important in the new era of globalization, whether it’s related to banking, bill payments or even purchase of grocery.” Supermarkets in the UK deliver grocery at the doorstep on receiving orders through the electronic system. What’s more, the world is heading toward a smart or intelligent card, which uses a multifunctional microchip. It’s like a computer on a card, which can be used worldwide. The card with the highest level of security combines payment functionality. The first such card launched in the UAE was by Emirates Bank International in the UAE earlier this year. Qatar and Kuwait are expected to introduce the card in due course, while it will take two to three years for the Kingdom.”
Scriven claimed that Visa was leading the world with 40 million chip cards. “Most Visa cards will have the chip technology in seven years,” he said, adding that the advantage with these cards was that it would have a “global utility and global acceptance” as it would have the whole new range of payment devices. All transactions, small or big, could be done with these cards” Said Scriven: “I’m confident there will be a sea-change in the Kingdom in the use of cards as the future is of non-cash payments. In fact the Kingdom has great potential for such cards, which calls for a change in consumer behavior.”
