High penetration [Credit Cards] In Saudi Arabia, out of a population of some 24 million people, there are eight million with bank accounts. Out of this 7.5 million use debit cards, but just 1.2 million own credit cards. The credit gap grows even larger for Egypt’s 79 million residents, where just 10 million have bank accounts and of these 3.2 million own debit cards. In the region’s most populous country, a mere 1.5 million credit cards are in use.

By comparison, there are roughly three credit cards per resident in the United States, at some four cards for each Japanese resident. “This region is generally lacking in scale,” he said.

Numerous payment systems process anywhere from 100,000 cards on up, even though one system could be used to securely handle as many as five million cards. “This makes a tremendous case for outsourcing,” he said. Bringing local penetration rates, which are in line with other emerging markets, closer to more developed economies requires awareness campaigns to educate the public about credit, Lawson said.

Cash happy

But in this region, many people in the region prefer using cash and avoid using credit, he said. “It’s an evolutionary thing and these things take time,” he said. “The main reasons why rates are low here are cultural barriers and lack of customer education. People need to be familiar with these products and they need to understand the core benefits.”

New swipe service for people on the go Payments through credit card represents only 10 per cent in the region. “Today in this region 90 per cent of transactions are in cash, and 10 per cent are through credit. Over time, we expect that to be the reverse,” said Denzil Lawson, MasterCard Middle East and Levant general manager. MasterCard is launching a war on cash. He said it is the practice of paying with cash, and not rivals Visa or American Express, that poses the biggest threat to the company. The cards are programmed for small purchases – bigger sales require PIN code verification. To prevent fraud, cardholders can choose how many PayPass purchases can be made before top-up is required through verified PIN code entry. (By Ivan Gale, Staff Reporter, Published: May 15, 2007, 00:00, Gulf News http://archive.gulfnews.com/articles/07/05/15/10125378.html)