DUBAI, 30 May 2006 — Automatic teller machines will be relegated to the corners of museums, not shopping malls, if Visa International sees its vision fulfilled. With the soaring number of electronic transactions in the Middle East, the company has been stepping up its local activities. While the region’s older generation received their salaries in cash, today’s e-enabled youth are true believers in the power of plastic. But soon, even plastic will be replaced by smart phones that will allow electronic payments to be made from anywhere, for any amount.
“We used to talk about cards and then we realized that we were missing the objective. What we are actually talking about is electronic payment,” said Anne Cobb, president, Visa International Central and Eastern Europe Middle East and Africa (CEMEA). “Whether it’s on a card today or it’s going to be on a phone tomorrow, what is really important is to move away from cash.”
She continued, “In Saudi Arabia, many people still perceive cash as the prime means of transaction. This leads to idle resources. Take an SR100 bill and put it under your mattress. Come back a year from now and what do you find? The SR100 bill. If you put the SR100 bill in the bank, the bank is going to use that SR100 to lend money and this money is going to go to businesses and people. They are going to use this money to do more business and then you create a virtual circle. With cash, it’s always face to face, one to one and there is no multiplier effect which brings wealth and economic growth.”
Cobb remarked that there is always a learning curve in emerging markets where businesses and consumers must be educated on the advantages of moving from cash to card payments. She is pleased, however, with the growth of electronic payments across the region.
“We can see that progress is being made,” Cobb said. “We had 1.5 million cards in the Middle East 10 years ago and 16 million transactions. Last year we had 400 million transactions and I hope that next year we’ll have a billion transactions.”
It is important to note that Visa is promoting the use of electronic payment, whether it is with a debit card or a credit card. Right now, in the Middle East we are still using magnetic stripe cards for electronic payments, but the technology is developing rapidly in the e-payment arena and Cobb believes that this will open up a whole set of new opportunities.
“Devices will continue to converge, leading to the formation of new and interesting partnerships. The end result will be more payment choices for the consumer. Technology gives us the opportunity to put a payment application on all types of devices and to add a range of applications to cards,” she advised. “It is possible to add and remove applications to these cards and devices, allowing the consumer to create their unique payment environment.”
Some of the futuristic technologies that will soon become popular methods of day-to-day payments include:
• Mobile payments — enabled with the help of smart phones that use a technology called Near Field Communication (NFC). Payments can be made from anywhere and for any amount.
• Contactless payments — ideally suited for small ticket items, this payment process is fast and the card never leaves the consumer’s hand. Contactless payments provide increased efficiency whether within the retail arena or for mass transit applications.
• Smart posters and billboards — use inexpensive Radio Frequency Identification Devices (RFIDs) embedded in posters and billboards and when combined with smart phones, provide an integrated environment for making payments and communicating with consumers.
• Wireless Point of Sale Terminals — ideally meant for merchants who do not have landline connections or those vendors who are always on the move such as salesmen, plumbers or beach vendors.
How will consumers in the Kingdom get the opportunity to make use of these new efficient forms of electronic payment?
“Banks, governments and organizations will be able to give the consumer the payment choices they demand by building flexible, future-proof systems,” said Cobb.
So it’s up to you. Take this article to your bank and demand a bit of payment innovation.
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