Dubai: More UAE consumers are warming up to the idea of using a plastic card pre-loaded with funds directly from their pockets, to avoid carrying cash around and getting stuck with high credit card interest rates.
The use of prepaid cards in the country is rising steadily, with the numbers in circulation quadrupling to 1.2 million at the end of 2012, according to Network International, a payment solutions provider. Prepaid cards are also fast catching up with credit and debit cards, with the industry growing from a “negligible” volume to $8.5 billion between 2008 and 2012.
“There is certainly a big market potential for prepaid cards in the UAE, especially across categories such as transport, gift, general purpose, youth, payroll and remittance,” Bhairav Trivedi, chief executive officer of Network International, told Gulf News.
Prepaid cards offer consumers the perks of making online and in-store purchases anywhere in the world without the hassle of opening a bank account, going through credit checks or incurring exorbitant late payment and interest charges. All that is required is to pre-fill a card with cash coming directly from the pocket.
The payment solution is seeing increasing usage among the unbanked population, as well as among business and leisure travellers, gifters and parents who wish to track the spending of their children. The growth is also spurred by the introduction of the Wages Protection System (WPS), which requires UAE institutions to pay workers’ wages electronically, either through a bank account or a prepaid card.
R. Sivaram, senior vice-president and cards business head at Emirates NBD, said tat while their numbers in circulation are still lower compared to other payment instruments, prepaid cards are growing at the fastest rate. He estimated that transactions using prepaid cards comprise roughly about 2.5 per cent of cashless payments in the UAE.
“The prepaid card market is growing faster. We have a lot of customers whose salaries are paid through prepaid cards, allowing customers to withdraw their salaries from ATMs or use their cards at the shops,” Sivaram told Gulf News in an interview.
It’s also popular among corporate customers, companies who want to keep track of staff expenditures, and families who want to get a grip on family finances. Likewise, there’s a growing segment of the population who gift their friends and loved ones with prepaid cards.
Rasool Hujair, CEO of Majid Al Futtaim Finance, said among the prepaid options, gift cards are the most popular among their customers. “We can attribute this to a few key reasons. Firstly, the ease with which gift cards can be obtained. Secondly, it provides a risk-free gifting option for those unsure of what to buy friends and family,” he said.
“Prepaid gift cards also offer a secure and safe way to purchase gifts online, allowing customers to control the information they share on the web and control any associated fears regarding security.”