Passe are the days when one carried wads of hard currency in one's pocket. Well, almost. Nowadays, be it young working adults or seasoned businessmen, it is with a studied finesse that they use chic-looking plastic cards in place of money to shop for both essential and not so necessary items. Plastic money in the form of Credit, Debit and Smart cards is relatively a new concept in GCC, especially so in the Sultanate of Oman.
Latest figures show that the credit card holders in Oman are a little less than 100,000 while debit cardholders would be about 1.5million.World over; virtual money has become an essential part of daily life.
Playing the cards well
Simply put, a credit card enables a person to buy now and pay later. A debit card on the other hand, deducts money from the savings account attached to it enabling one to buy goods and pay simultaneously, while a smart card belongs to a totally different category. It is futuristic and is yet to hit Oman market seriously.
"By very nature, credit cards allow the consumer to go beyond his spending limit at any given moment. On the other hand, a person who is risk-averse - meaning who avoids debt of any kind generally opts for debit cards. "In the last five years, one has seen tremendous improvement in the usage of cards in Oman. Earlier, customers only used cards to withdraw money. Omanis are more educated now about it. They now use credit cards to even buy groceries, " is what Farah Abdulla Moosa, Manager of Oman Arab Bank' s Visa Card Centre, has to say about the gradual rise in the number of credit card users.
"This is a dynamic industry and anything is possible. Electronic payments are fairly young when compared to cash, but is a rapidly growing one. World over, plastic payments are gradually displacing cash in many areas such as daily consumer payments and even for corporate and government transactions. Consumers are increasingly mature in their payment habits and with technology as a key enabler, we will definitely see a very significant proportion of cash transactions being replaced by electronic payments,"thinks Omar Alwi, Country Manager for Oman, American Express Middle East.
A smart card is technologically advanced than both credit and debit cards. The electronic chip installed on it recognises and reveals at request a consumer's identity instantly. They are designed to store medical history, passport details, blood group and even fingerprints. This helps both the consumer and the service provider. "The entire world is moving towards a chip card. One can see an incremental growth in debit cards which is far higher than credit cards," says Mudit Saxena,Head of Marketing, Bank Dhofar.
"Cards offer greater convenience, security and flexibility than cash. They are a great payment tool that complements the modern lifestyle of consumers, providing them an easy and safe payment channel," says Omar.
Cash is the King
In Oman unlike other countries, cash still rules the day. A general trend in behavior indicates that plastic money comes into usage only when they are travelling abroad. "It cannot replace money. People still need to carry hard cash. It gives them a sense of security," says Moosa of OAB. Contrarily, Ravneet Chowdhury of Standard Chartered Bank's Head of Client Relationships believes," cash is going out of fashion. World is opening more. So carrying wads of cash is impractical."
The uptake on virtual money is still low here in comparison to the rest of the world. One reason could be that Oman offers low wages to its employees in comparison to other GCC countries like Qatar. Combine it with the fact that virtual money is a relatively new concept. As a result, the locals are not very comfortable with the idea. Only the expatriates and the Omanis who have had education abroad opt for the plastic money, as they would have had tasted the convenience offered by them.
Big players
The presence of international banking giants like American Express, HSBC, Diners Club, Global Card Services, Visa Electron and Standard Chartered in Oman has triggered proprietorial instincts in the local players.
National Bank of Oman, Oman Arab Bank, Bank Dhofar, Bank Muscat and Oman International Bank stand their ground firmly rooted in the fact that they set up business long before the world biggies made an entry in Oman besides commanding the local loyalty. At the same time, the local banks are aware of the fact that they have to be EMV compliant dictated by international banking standards, sooner rather than later. EMV compliance strives to put a stop to fraudulent transactions through skimming and other kind of thefts.
Consumers also get attracted to the fact that Omani banks offer Islamic banking. "Bank Dhofar is the first to launch Islamic credit card Al Noor for which we only charge a fee," says Saxena of Bank Dhofar. Islamic credit cards offer more than convenience to its users. It is one with their personal religious preferences. But OAB's Moosa feels that competition is on a different platform altogether, "it is more with the whole banking service rather than it being credit card oriented." The reason is that most of the local banks require a consumer to hold a savings account with them if a credit card has to be issued. But with international banks this feature is mutually exclusive.
Nevertheless, each bank relies upon its USP to expand its consumer base. Chowdhury of Standard Chartered says the bank's unique selling point lies in the service quality they offer to the consumers. He says, "Over 80% of our sales are done through mobile sales consultants who visit customers at their convenience." Asif Redha, Acting Head of NBO's Consumer Banking Division says, "On the other hand, the USP with a bank like NBO lies in the fact that it has a 'Money Back' plan where credit card customers are rewarded for use of cards in either the merchant outlet or for cash withdrawal. Immediacy is Oman Arab Bank's USP. Moosa supports the claim when he says, "we get calls from abroad (from our traveling customers) and we take action on the spot." Bank Dhofar offers first interest free credit card in Oman attracting newer clients.
"Our cards are a passport to exclusive privileges and our card members choose us for the world class service and personal recognition," feels Omar, of American Express.
Apart from the regular cards, most banks offer credit cards exclusively for Internet usage. These cards are easy to use and payment is also free of any technical hassles garnering tremendous popularity with the masses.
Co branding is big
Companies have benefited tremendously with the concept of co-branding. The basic formula at work is to well-established brands come together creating a win-win financial situation for all the entities involved. For example, when an airlines and a credit card come together, they share their customer base. They build loyalty programmes triggering higher revenue for both brands while dangling free offers to lure and keep customers. A case in point is NBO's combined card in conjunction with Master Card. Saxena of Bank Dhofar points out that, "It works but out of the five odd cards a consumer has in his pocket, to get him to use your own card your programmes have to be really good. Oman market is ready for more and more such programmes."
"Customers today seek affinities with the brands and the services they buy. They are buying not just the tangible but also the intangible benefits of the brands. Co-branding programmes draws out the best of both brands in meeting the card members' lifestyle and emotional needs. We have successful co-branding products in other markets in the Middle East such as the Dubai Duty Free Card in the UAE and the recently launched BMW Credit Card in the UAE and Bahrain,"said Omar.
Utility services like communication, airlines, and fuel stations have big consumer bases. Current trends show that both banks and other companies are either starting to step into the co-branding territory or are at least thinking about it. Nonetheless, it is a fact that the percentages and the co-branding market are still small with matching margins.
Risks and Defaults
Issuer banks have to contend with potential defaults on part of the consumers ranging from intentional credit runaway, circumstantial default to habitual delinquency. On the other hand, two major risks for the banks are the credit risk and fraudulent use of cards through skimming. "Being a global cards player, we have developed core competency in risk management. We help consumers who are facing difficulties in repayment of debts often it is a question of reminding customers about missed payments," Chowdhury of Standard Chartered offers an olive branch to the customers. Placing faith in the consumer's repayment abilities is often a remedy against a potential panic-attack to the banks.
Says Moosa of Oman Arab Bank, "We are a conservative bank. For us to give a card to a customer, we have a standard that a customer has to meet. These standards are high. It is difficult for a bad or a huge risk to materialise. Risk is minimal." Bank Dhofar's Saxena opines," most people here live beyond their credit limit. So you have to build a risk profile. But majority consumers do pay back in time." Despite the risks and defaults, credit cards make a highly lucrative business, which no bank would like to lose. Developed nations work through a central database of perpetual defaulters. Once blacklisted, no other bank entertains the defaulter. Such an exercise is still in its infancy in Oman.
Says Omar, "Generally, we manage credit losses on a portfolio basis ensuring a targeted trade off against returns. We employ technology based statistical models for assigning credit exposure and determining appropriate collection strategies".
The Sweeteners
Free weekly movies, dining offers, cable television discounts and travel perks top the list of Standard Chartered freebie offers besides distinct benefits like purchase protection and lost card protection. The bank also offers photo sign cards for additional safety. Five supplementary cards are also on offer with every primary card.
In celebration of the 10th year of Membership Rewards, American Express has introduced a special 'Double Rewards'
campaign, giving away six million points which can be redeemed for a host of lifestyle benefits. The comprehensive range of benefits include travel, fine dining and leisure activities and fantastic shopping rewards.
Cashing in on the football fever, NBO ran a special promotion where customers were offered NBO FIFA MasterCard credit card for over six months. 15 lucky customers were chosen to watch selected world cup matches live. Currently running is a special summer offer with monthly prizes to win by every credit card holder. OAB on the other hand has weekly draws for its credit card holders. Currently on offer is a holiday package to one of the four destinations London, Cairo, Bangkok and Kuala Lumpur for two people in the months of June and July; all expenses paid for including the airfares and taxes, five start hotel accommodation for five days.
Khareef festival promotional offer is what Bank Dhofar has for its cardholders. The package comprises of a weekend holiday in Salalah for two people to be flown by Oman Air for a total of 3 nights stay at the 5 Star hotel complete with breakfast.
Virtual money may not have the distinct smell of a freshly minted currency note but in view of its convenience and safety, it sure wins hands down over the good old cash.
Voices Compiled by Amna Firdausia
"The world is heading towards plastic. I think convenience, security and wide acceptance are the key factors that are driving the trend of using plastic instead of cash or cheques. It enables me to spread payment for large purchases because at times it's too dangerous to carry cash. Hussain bin Salman Al Lawati, Vice Chairman, Oman Cables
"The good thing about credit card is that they let you make purchases when money isn't an option and the not so good thing is they tempt you to impulsively charge items you don't really need. Thus, credit cards also have fueled an explosion in consumer debt. An increase in debit card purchases, unlike an increase in credit card purchases, would not necessarily lead to an increase in household debt," Dr. Israr Ul Hassan, Assistant Professor Cemistry, Oman Medical College
"My job demands a lot of overseas traveling and I find it a lot easier to do payment through credit card while traveling because then I don't need to carry cash and even there is no hassle of exchanging the currency but I don't really favor it for long term as credit cards, have served as the instrument of financial ruin for more than a few careless shoppers. Interest rates border on the obscene, and as minimum monthly payments can stretch out the payback period of a purchase for years, credit cards encourage consumers to live beyond their means." Anshu Jalan, Brand Executive, Capital Store LLC
"Sometimes a card is a prerequisite for transactions such as Internet purchases and rental collateral. It's an upward trend in global online shopping. I find it a pure asset but only when you pay your bills on time. If not it can be turned as an expensive death. Don't just keep cards in your wallet and use them randomly. Each card has a purpose. Get it right and you could be hundreds of pounds better off each year for which one needs to be disciplined, keep records of the expenditure and pay the bill on time. Having said it all, I myself is planning to get disciplined," Amer Mustafa Al Fadhil, Vice Chairman, The Wave
"Usage of credit and debit card has been growing rapidly, though cash continues to be the predominant mode of payment settlements. While there is growth in nearly all global markets, we see that the lesser developed markets are maturing faster than many of their more developed counterparts. It will not be long before we have a nearly level playing field across the globe because putting plastic in your wallet is a convenient way to avoid carrying cash while maintaining the ability to make purchases." Sharifa Khalfan Rashid Al Talei, Marketing Executive, Oasis Life Style LLC.
How to Prevent Card Fraud
Though most of us are cautious, still it is not always possible to prevent or stop credit card fraud from happening. Cardholders and issuers lose huge chunk of money every year due to credit card fraud. There is no escape theory as such but there are certain precautions you can take to make it more difficult for a crook to capture your card or card numbers and minimize the possibility of any deceit.
1. Sign your cards as soon as they arrive
2. One should not carry credit cards in wallet. It should be carried separately in a zippered compartment, a business card holder, or any other small pouch.
3. Keep a record of your card numbers, their expiration dates, and the phone number and address of each company in a secure place. However, never store the written down PIN together with a card.
4. Do not leave a card unsupervised. Keep your card in view whenever any transaction takes place. Retrieve your card promptly after using it.
5. Void incorrect receipts. Save receipts to compare with billing statements.
6. Open bills promptly and reconcile accounts monthly, just as you would be your checking account. It is pertinent to report any questionable charges promptly and in writing to the card issuer.
7. Notify card companies in advance of a change in address.
8. Never give out any personal information over the phone, such as SSN, PIN numbers etc. No one not even bank employees have the right to demand it. Only enter it in a proper PINpad.
9. Do not allow anyone to see your PIN.
10. Check your credit report regularly. This allows you to see if any there is fraud occurrences.
11. Never lend a card to another person not even to your best friend or a close relative.
11. Report lost credit cards to your bank immediately.
12. Check statements for unauthorized charges, especially if you have used the card while travelling overseas.
13. Never leave cards or receipts lying around.
14. Notify card companies in advance of a change of address.
15. Never give your number over the phone unless you are initiating a transaction with a company you know is reputable. If you have questions about a company, check with your local Consumer Protection Office or
Better Business Bureau before ordering.
Things to keep in mind incase you lose your credit card
If someone loses or misplaces his or her credit card, in such a scenario people generally tend to panic or cry over the split milk. Well, that really won't help. Always remember, if your credit or charge cards are lost or stolen, call the issuer(s) immediately. Most card companies have a toll-free number for reporting missing cards. Some companies provide 24-hour service too these days to handle such crisis. This will prevent illegal usage of the card by any miscreants.
If suspecting fraud or facing billing problems
Such issues can again give much headache to anyone. However, it is always better to know ways to deal such situations. Like if you come to know that someone has illegally used your account number, report promptly and in writing. Send the card issuer a letter that includes your name, account number(s), and the charges that you question with your reasons. You must direct your letter to the "billing error address" provided on your statement. Moreover, open billing statements promptly and reconcile your card accounts each month, just as you would your checking account. Also, save all receipts to compare with your billing statements.
What precautions to take at an ATM counter
It is always not feasible but try not to use overcrowded ATMs to reduce the chance of robbery or someone seeing the PIN you have entered.
Make sure you have everything after finishing a transaction. Just keep in mind, after finishing, you should have: a card, money and a receipt.
Safety precautions on the Internet
Do not give your personal and credit card information to unfamiliar sites. Try to keep your purchases limited to the major online retailers.
Make sure the site is using SSL encryption, which provides secure communications on the net. Contact your bank immediately if you feel you have become a victim of online.
Be careful of "sound alike" companies that may be unaffiliated with a well-known, reputable firm. Use an Internet search engine to double check whether; it appears that another site exists for the company from which you want to purchase items.
Print and keep a record of all of your transactions. If you have not received the product when promised, reach out to the company in a firm, but polite inquiry.
The best way to protect oneself from fraud, however, is always to review monthly credit card statement carefully for unauthorized charges.
Anyone who believes he/she has been charged for an item that was neither authorized nor received in a reasonable amount of time should report this in writing to the applicable credit card company within 60 days.
In most circumstances, the consumer will not be legally responsible for such charges.
Oman Arab Bank -- Growth with Conservatism
Oman Arab Bank's growth and success can largely be attributed to its conservative philosophy. It has followed the principles of business conservatism of the Arab Bank Plc, with a particular emphasis on providing the highest level of personalized services to its customers.
It has got Visa Credit Card- Platinum, internet shopping card, gold and classic.
OAB has launched a new promotion for its Visa Credit Card holders, to take the advantage of the holiday season. There will be weekly draws with a holiday package to London, Cairo, Bangkok and Kuala Lumpur.
Winners can choose the destination of their choice. The packages include air tickets for two persons (inclusive of airport taxes) and accommodation at a five star hotel for five days. All OAB cardholders are eligible to participate in the draw.
BankMuscat Credit Cards -- Key to a world of great lifestyle
BankMuscat offers a bouquet of feature-packed credit cards to its customers in Oman namely the Gold-Premier and Standard-Classic credit cards in association with MasterCard and Visa, Platinum credit cards issued in association with MasterCard, the SQU credit card an exclusive card issued for students, Corporate purchasing cards in association with MasterCard and the Electron Debit Cards issued in association with Visa.
These cards are packed with benefits like worldwide acceptance, up to 40 days of interest free credit, good credit limits, access to instant cash worldwide, easy repayment facility, increased security through the photo-card option, supplementary cards for family, free travel insurance, 24-hour customer service, zero lost card liability and global emergency card replacement service. Along with all this, the cardholders are automatically enrolled into 'basma' Oman's first multi-partner smart card enabled rewards program, which offers instant reward with accumulation and redemption of basmaReward points at any of the basmaPartners' Point of Sale (POS) terminals.
BankMuscat is promoting its card products through attractive promotions, which include: credit card usage summer promotion aimed at rewarding its credit cardholders who use their Classic and Gold Credit Cards.
Cardholders spending RO200 over one or more transactions during the promotion period till 31st August 2006 get a chance to win from over a 100 holiday packages worth RO500 each. The other one is 'Add more smiles to your day' credit card promotional campaign in association with Visa International. Under this promotion which is valid until 31st July 2006, all customers who receive a BankMuscat Visa Credit Card will get a free basmaRewards card pre-loaded with basmaReward points worth RO15 along with a BankMuscat Visa Classic Credit card or a free basmaRewards card pre-loaded with basmaReward points worth RO25 along with a BankMuscat Visa Gold credit card. These basmaReward points can then be used as cash for paying for any product purchased from any basma participating outlets.
NBO Credit Cards
National Bank of Oman's (NBO) continuous change for the better philosophy has resulted in internalizing improvement and adding up new products as an ongoing process. This has helped them to develop products that are of high value to the customers and unique in the Sultanate of Oman. The bank has scored many firsts in the credit card business like the Internet Cards in Sultanate of Oman, a credit card designed exclusively for Internet use with the brand name Webshopper Card; it was the first bank to launch such a card. It offer a specially designed World Cup card with special prize packages for the FIFA World Cup 2006.
NBO is the only bank that offers a reward program called Money Back plan where credit card customers are rewarded for use of cards, either for retail transaction or cash withdrawal. In addition, it has a Co-Brand Card that combines the power of two strong brands of Oman NBO and Oman Air, besides that of MasterCard offering the benefits of such large brands. Presently NBO is running a usage campaign called "You Shop We Pay". Under this program customers who use their card for a specific value will be eligible for a prize draw. If they win, 100% value of their spend could be reimbursed subject to certain limits. NBO has several other benefits such as discounts in several retail outlets, special discounts on holiday packages and high value electronic items.
Bank Dhofar -- Taking You Ahead
Credit cards provide a cash-free method of payment, financial flexibility, worldwide acceptance, and round the clock convenience for shopping, travel and entertainment expenses. There are different credit cards being offered by BankDhofar SAOG which are: Master Card Platinum, Master Card Standard and Visa Classic, Visa Gold and Master Card Gold, Al Noor interest free card, Visa Electron (Debit Cards) and E comcard (internet card).
The 'Al Noor' is the first Islamic Credit Card and only instalment card that enables you to make your purchases anywhere in the world and settle your bills in easy instalments.
Its acceptance in over 23 million outlets worldwide helps the customers to go shopping almost anywhere in the world. While purchasing an air ticket through Al Noor a person automatically receive an accident and total permanent disability insurance coverage for the entire trip which would be absolutely free. Where as, its ecomcard allows to shop online and has been specifically designed for internet transactions only which has superior security features to help prevent fraudulent transaction on the card. The Visa and Master cards are credit cards which are prestigious, secure and convenient methods of payment. They simplify life and eliminate the need to carry for travel, shopping and entertainment expenses.
The other value added feature in Platinum, Gold and Classic cards includes Khareef Festival Weekend holiday packages for two in Salalah by Oman Air. Package includes 3 nights stay at Crown Plaza. Bank Dhofar covers insurance on baggage loss and when flights been delayed or cancelled.
American Express at its Best
American Express offers Charge Card and Credit Cards. Charge Card offers a line of credit that is required to be paid back in full at the end of the credit period. The card member is charged a fixed fee for this service.
Credit Cards offer interest free credit for a specific credit period, and a fixed interest is charged on any outstanding payment. Both Charge Cards and Credit Cards offer greater financial flexibility than cash.
American Express offers a wide variety of cards in the Middle East including Green, Gold and Platinum Charge Cards, Green Credit Card (US$), Gold Credit Card with ID Keeper (available in local currency) and Corporate Cards. The Gold Credit Card with ID Keeper in Omani Riyal was introduced earlier this year which has worldwide customer care service, it offer access to airport lounges, provides travel accident insurance, free travel inconvenience insurance, up to nine free supplementary cards, ID Keeper technology with facilities for online shopping such as storing of favourite website addresses, login and password details; Membership rewards programme where every RO spent will provide two membership reward points. Membership rewards is based on a system of earning and redeeming points, ensuring that card members enjoy a comprehensive range of benefits including travel, fine dining and leisure activities and fantastic shopping rewards. This year, in celebration of the 10th year of membership rewards, we have introduced a special 'Double Rewards' campaign, giving away six million points which can be redeemed for a host of lifestyle benefits.
They even have successful co-branding products in other markets in the Middle East such as the Dubai Duty Free Card in the UAE and the recently launched BMW Credit Card in the UAE and Bahrain.
By Sarada Vishnubhatla and Monalisa Nayak
Oman Economic Review 2006
