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

Any new concept that is introduced in a country takes a while to grow and to come to the age. The concept of credit cards has come to a long way in this regard, and just like the cellular industry, the credit card industry will continue to be one of the vibrant industries in Pakistan. People are catching up to the concept quite fast and it will not be long before our economy is largely based on plastic money.

Khwaja Asif, EVP UBL made these observations, in an interview to PAGE.

PAGE: Could you please brief me about your bank's credit cards?

KHWAJA ASIF: UBL Credit Cards are the most innovative and vibrant brand in Pakistan. It is Pakistan's and South Asia's 1st Chip Credit Card certified by Europay MasterCard Visa (EMV). It's the first bank to launch simultaneously in 9 cities, which now have increased to 11 cities. Rated among the top 5 best designed Credit Cards of the world in 2005 (by Card Tech USA) to date, it is one of the industry's best valued and most popular propositions. UBL Credit Cards has set the industry standard and led to reactive copied propositions by others. UBL Credit Card has also set a record by acquiring fastest 100,000 Credit Cards in industry's history in Pakistan within 7 months of launch).

PAGE: Though credit cards are quite common in all big cities of our country, yet there are lots of places where cash payments are being preferred. What are the strategies of the banks in this regard?

KA: By effective advertising / promotions and by training our field force to detail the products to the consumers in a more effective manner is an important first step towards promoting the use of credit cards. By creating greater awareness regarding the use of credit cards, any confusion that the consumers may have is dissipated.

By providing incentives to use card instead of cash and coming up with attractive promotions and offerings customers at POS is often used to encourage the use of Credit Card. Our Dip the Chip proposition is an example of how customers could be given extra facilities and instant rewards to encourage them to use their credit cards instead of cash.

Further, involving an increasing number of merchants / partners in our promotions, customers can avail the credit facility at wide array of outlets. This results in an increased perception of plastic money as a more mainstream method of payment.

PAGE: Some outlets charge an extra fee for accepting credit cards and cite the reason that it takes a long time to get money from the banks for the goods sold on the credit card. Comment please.

KA: It's an incorrect statement that it takes a long time to get money from the banks. The only reason merchants charge an extra fee is because a certain amount of discount is deducted on all credit cards transactions before the banks pay them.

PAGE: Don't you think that credit cards have promoted a kind of consumption culture which is not good for our economy and particularly the middle classes is in problems?

KA: Consumption in an economy grows in direct proportion to the income of the people. Rising consumption in an economy can be a sign of economic activity as well as economic growth and the greater the consumption, the greater are the chances of economic stimulation. I personally think that since many industries in Pakistan are in a primitive stage of growth, increased consumption will encourage these industries to become strengthened and provide a greater industrial diversity in Pakistan. In my opinion, productivity will come hand in hand with the increased consumption. Credit cards are only a more convenient mode of payment. It will be up to the consumers and the economy to set the pace of consumerism.

PAGE: Some circles believe that inflated bill/statements are sent to the clients at times which though settled later on bring about disreputation to the banks?

KA: Excessive bills and statements are received by the clients when they do not make their payment within the due date and hence they are charged extra markup and late payment fees. However, this can be avoided by making payment on time.

PAGE: What is the rationale behind an annual fee waiver? Elaborate please

KA: Annual fee acts as a barrier for people already using other cards because for using a new card they have to pay an extra cost. Hence, they often hesitate to use a new card even though the annual fee charges are quite nominal. By giving an annual fee waiver this barrier is removed. Further, annual fee waiver incentives customers to use their card thus enhancing spend on the card. It acts as a motivator for non-starters to start spending on the card.

PAGE: Pakistan International Airlines and an international bank entered into a partnership and launched a co-branded credit card. How do co-branded credit cards facilitate the clients? What has your bank done in this regard?

KA: Co-branded cards provide a better offering and more value to the customers. The benefit to the cardholder comes mainly in the form of reward schemes and discounts offered by the credit-card company. Co-branding, apart from the reward schemes with a number of redemption options, also allows for discounts at specific outlets when using the card, free merchandise, frequent buyer programme similar to frequent flyer points etc. PSO Roadmiles and Ufone Talktime are two of our very successful initiatives in this regard.

PAGE: The fast changing life style has made plastic money popular in Pakistan. What would you say about the future of credit cards in our country?

KA: As the Pakistani economy grows, more people will have higher incomes and the current trend of consumerism will continue to be seen. In the face of this rampant consumerism, I foresee that an ever-increasing number of all consumer transactions will be done through plastic money. Usage of plastic money has a direct relationship with education levels and the economic growth. As more people become educated and as the economy provides greater savings for people, people will realize the benefits and convenience of using credit cards as a method of payment.