PLASTIC MONEY

The popularity of plastic money to greater extent can be associated with convenience, reliability and easy availability

KHALIL AHMED, Senior Correspondent
Sep 11 - Sep 17, 2006

Nobody would disagree that our life style has changed over the period of last decade during which besides various social and economic factors, the plastic money has gathered momentum in Pakistan.

The popularity of plastic money to greater extent can be associated with convenience, reliability and easy availability. Until the beginning of the current century, I mean just six years back, availing a credit card was not an easy thing and credit cards were restricted to just the privileged class, to be precise. However, the scenario is entirely different now. Even if your salary is around 8,000 rupees, you are eligible to have credit cards. This ease has provided convenience to millions of Pakistanis but at the same time it has brought about a kind of consumption culture which is beyond the affordability of the grass roots. Well, there are pros and cons everywhere and in everything, I suppose. Though there are some drawbacks of keeping plastic money, I consider it a blessing in disguise and this is my personal opinion to which there may be lots of disagreements. I suppose the ease and convenience provided by plastic money is remarkable particularly today when credit cards are being accepted at thousands of locations, with some exceptions in our country.

Plastic money is in vogue in our country these days and credit/debit cards are being used today for renting a car, securing hotel reservations, buying books online, making everyday purchases, going out for lunch/dinner with family members/colleagues/friends, shopping at malls, availing vacation tours, getting fuel for the car, buying home appliances and even making donations etc.

It is a fact that use of plastic money became prevalent across the world particularly in the 1990s, a decade characterized by the technological revolution. However, the era of electronic payments dates back to 1958 when Bank of America launched its pioneering BankAmericard program in the USA. The era of electronic payments has touched new heights now with contactless chip and proximity payments. One of the latest developments is that of Visa Contactless card which is a new payment method that removes the need to physically swipe or insert a smart card into a payment reader. Visa says that by simply holding the Visa Contactless card at a close range of 4cm from a reader, the card will be detected and your transactions will also be safe and secure.

The credit card organizations, Visa and MasterCard, have made tremendous progress across the world. MasterCard is operating in more than 210 countries and territories whereas Visa claims to be number one with more than 1.4 billion Visa cards in circulation and with 27 million merchant acceptance locations in 160 countries. Visa has a variety of products such as Visa Classic, Visa Gold, Visa Platinum, Visa Infinite, Visa Mini, Smart Cards, Visa Contactless and the state-of-the-art Visa Mobile which brings all the benefits of the visa card to the client's mobile phone.

ATM CHARGES PER CASH WITHDRAWAL

1-Link

Orix

M Net

ABN Amro Bank

Rs. 15

Free

Rs. 15

Allied Bank

Free

Free

Free

Bank Alfalah

Rs.15

Free

Rs. 20

Al Baraka Islamic Bank

Rs. 15

Rs. 15

Rs. 20

Habib Bank Limited

Rs. 20

---

Rs. 20

Askari Bank

Rs. 15

Free

Rs. 15

Bank Al Habib

Rs. 15

Free

Rs. 20

PICIC Commercial Bank

Rs. 15

Rs.15-20

Rs. 20

Union Bank

Rs. 20

---

Rs. 25

United Bank

Rs. 15

Free

Rs. 20

Soneri Bank

Rs. 50

Free

Rs. 50

Meezan Bank

Rs. 15

Free

Rs. 15

KASB Bank

Rs. 15

Free

Rs. 15

MCB

Rs. 15

Free

Rs. 10

Metropolitan Bank

Rs. 15

Free

Rs. 10

Saudi Pak Bank

Rs. 15

Rs. 15

Rs. 15

Prime Bank

Rs. 20

Rs. 20

Rs. 20

Standard Chartered Bank

Rs. 10-15

Free

Rs. 10-15

Faisal Bank

Rs. 15

Rs. 20

Rs 20

National Bank Of Pakistan

Rs. 15

---

Rs 20

First Woman Bank

No Service Charges As Yet

Asia is a kind of emerging market for the credit card companies. Visa's total card distribution worldwide stood at more than 35% in the USA, 20% in Asia Pacific and 21% in Europe etc. by March 2006. The official Visa sources quote that Visa International handles business worth more than $3 trillion in a year. Because of the booming economies such as China and India and because of the economic progress in Pakistan, the credit card companies are reaping rewards in terms of huge consumer base. By August last year, there were more than 845,000 Visa cards in circulation in Pakistan and the growth rate was more than 100 percent according to the Visa sources. If I estimate, I could guess that there must be more than one million Visa cards in circulation in our country and future is promising as well.

RETAIL SALES VOLUME

IN CREDIT CARDS

Korea

$129bn

Japan

$103bn

Australia

$75bn

Taiwan

$25bn

Hong Kong

$20bn

New Zealand

$9.4bn

Thailand

$7.6bn

Singapore

$5.89bn.

India

$5.37bn

Lots of local and international banks are offering credit/debit card services in our country. Let me give you some of the instances. MCB, one of the leading banks of Pakistan with a network of over 1,200 branches all over the country, offers MCB ATM Regular Card and MCB ATM Gold Card. UBL launched Pakistan's 1st Chip Credit Card. Habib Bank's Value Debit Card is getting popularity. Askari Commercial Bank Ltd offers credit card as well as ASKCARD, a debit card. Bank Alfalah Credit Card claims to be free forever and the bank also offers Hilal debit card. Bank AL Habib offers an ATM Card which also works as a Debit Card. Standard Chartered Bank VISA Debit Card is also the Standard Chartered ATM Card. The Standard Chartered-PIA CoBrand Credit Card offers lots of benefits such as an exclusive range of privileges with PIA's Frequent Flyer Program, awards etc. According to a source by August last year both Citibank and Standard Chartered Bank had around 33 per cent share in the credit card market and they were followed by Askari Bank with 14 per cent, Union Bank(now acquired by SCB) eight per cent and Bank Alfalah six with per cent.

The use of plastic money is not free from drawbacks. Let me quote a few instances. Although there has been a phenomenal increase in the use of plastic money in last five years, yet there are lots of outlets where cash payments are being preferred to credit cards. At some outlets, if you make a purchase, the sellers charge an extra fee up to 2.5 percent for accepting credit cards and the reasons quoted by them are twofold: it takes a long time to get money from the banks; we have to pay 2.5 percent to the banks. Incase you want to experience this, please go to Saddar Karachi and purchase any electronic appliance. I have had such experiences. One of the drawbacks of credit cards is that there are lots of people who overspend and then are not able to pay back the amount within the due date hence they keep paying surcharges which at times are more than what they can afford. This has led to some kind of consumption culture in our society which I personally believe is not a good sign. Late fee charges are an issue as well. It has happened to me many times that I forget to drop the envelop containing cheque at the drop box and the end result is that I am charged 300 rupees as late fee plus the interest charged on the amount of my purchase. I think 300 rupees as late fee is more than what one can afford for not simply being able to drop the envelop in time. I suggest that the banks may charge the interest as mentioned by them but should reduce the amount of late fee from 300 rupees to just 50 rupees. One more complaint regarding the credit cards which I have read in the newspapers and have experienced myself as well is that even if one returns the credit card cutting it into two halves, the banks keep sending statements of bill. Once I got a visa card from a foreign bank and made just one transaction worth 700 rupees and then I decided not to use that credit card. I gave a call to the customer services and asked the person the procedure to return the card. I was told to cut the card in two halves, write an application and drop it in the drop box along with the cheque. I did the same thing. I must tell you that against 700 rupees of the transaction I had to pay around 3000 rupees. The bank charged 2000 rupees for the annual fee plus the interest. It was one of the horrible experiences I have ever had. One of the reasons quoted by many people for not using credit/debit cards is security. Cyber crime instances have been witnessed and this to some extent discourages common man against using plastic money.

THE TOP 10 CARD FRAUD HOTSPOTS

RANKING

COUNTRY

1

Turkey

2

France

3

Spain

4

United States

5

Italy

6

China

7

Thailand

8

Republic of Ireland

9

India

10

Netherlands

Two courier employees were arrested allegedly involved in credit card fraud in Lahore in July. There has been an instance in May that someone utilized three counterfeit visa cards of different African banks to make purchases worth Rs3.8 million in Lahore and Gujranwala and after that the culprit was arrested. There has also been an instance lately that some one obtained card of different banks in Lahore on the fake ID cards and utilized the complete balance. Well, this world is full of good and bad guys and unpleasant experiences will continue till the end of the world. What I conclude is that with explicit problems of various nature as quoted by me, plastic money will prevail in future but for that it is to be made sure that security and reliability are very much there.

ASKARI BANK LEADER IN MASTER CARD SALE

Soft Launch = 1999
Actual Launch = 2001 (Feb)
Total Card Holders = 225,000/-
3rd Position in Basic Cards Sale
Lowest BTC Markup = 1.5 %
Maximum Credit Card Branches Network
First Platinum Card Launched In Pakistan
Only Strategic partner of MasterCard in Pakistan
Leader in MasterCard Sale in Pakistan