According to the Central Bank of the UAE, consumer lending increased by AED 3.8 billion while total personal lending increased by AED 15.3 billion so far this year. While the growth trend is expected to continue, a number of different factors will affect the expansion of the credit cards industry.
Douglas Blakey, Group Editor Consumer Finance, Timetric Financial Services, shed some light on the cards and payments industry in the UAE:
- 15 million cards in 2012 compared to 11.3 million cards in 2008.
- 40% of the UAE population prefers to pay with credit cards.
- 15% of the UAE population prefers to pay by debit card.
- 29.3 transactions per credit card annually in 2012, compared to 12 transaction in 2008.
- 58.8 transactions per credit card annually expected by the end of 2017.
The cards and payment industry continues to offer growth opportunities for bank and non-bank card issuers, driven by mobile and online payments in addition to new channels. “The Central Bank, in collaboration with Emirates Identity Authority (Emirates ID), will introduce an e-wallet system by the end of 2015. The e-wallet will enable users to make payments through their ID cards for purchases through POS terminals or online. According to the Central Bank, AED 1.7 billion in cash will be issued and around 3% of the amount will be transacted through the e-wallet system in the UAE in 2015,” Douglas Blakey told bayzat.
However, the growth in the number of credit cards in the UAE may be tempered by the formation of the Al Etihad Credit Bureau. According to Abdul Aziz Al Ghurair, the head of the UAE Banking Federation and the chairman of Mashreq Bank,” Once the credit bureau is applied there will be no lending to anybody for six to 12 months because the banks will find out who’s really been borrowing and how much… They will find out all those people who have four or five credit cards.”
The UAE is clearly moving away from being a cash-based economy via alternative payment channels, and the growth of the credit cards industry is set to continue. However, growing pains are to be expected as the country finally implements a credit system to manage credit risk and protect consumers from over borrowing.