Following similar trends around the world, consumers throughout the Gulf region are rapidly moving to debit and prepaid cards as national regulators have moved to tighten lending, making credit cards a less viable option.
In an interview with Bloomberg, Michael Miebach, MasterCard’s president of the Middle East and Africa, stated that debit-card transactions in the region are increasing at twice the rate of credit cards. Prepaid card transaction growth was eight times that of debit. Furthermore, the number of debit and prepaid cards in circulation doubled and tripled, respectfully, stated Miebach. The Gulf region long was a credit card dominated market due to the high number of foreigners living in the area but that is quickly changing.
“It’s rapidly shifting toward using a lot more debit. Regulators and banks are pushing for that,” said Miebach.
The credit crunch by national regulators is seen as a response to the 2008 financial crisis that saw central banks bailing out some lenders. In Qatar, the Central Bank announced in 2011 that it was limiting the size of loans to both nationals and foreigners and limited the extent banks could charge interest.
While the moves by national regulators to limit credit has spurred debit and prepaid card growth to an extent. International payment trends have shown that in the years following the global financial crisis, consumers have adopted debit cards in large numbers, meaning it was only a matter of time before consumers in the Gulf region began to use debit and prepaid cards instead of credit.
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