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UAE Prepaid Transactions Seen at $18b by 2015

DUBAI - Prepaid transactions in the UAE are expected to reach a total of $18.4 billion by 2015, surpassing the $17.1 billion projected for the region’s largest economy Saudi Arabia, said Gerard Tilley, chief executive officer of VRL, a cards and payments 
events organiser.

Keeping in mind the potential of UAE, VRL has organised the Prepaid Summit: Middle East 2010, scheduled on March 22-23 in Dubai.

“MasterCard Worldwide — in conjunction with payment consultancy Edgar Dunn & Co — estimated that prepaid gross dollar volume (GDV) in the UAE would rise from $0.7 billion in 2007 to $4.4 billion in 2010 and $18.4 billion by 2015,” said a report published in VRL magazine Cards International.

The same study estimates that prepaid GDV in Saudi Arabia amounted to $3 billion in 2007, which will rise to 7.2 billion in 2010 and $17.1 billion in 2015. With a population of 24.8 million as of 2008, Saudi Arabia is by far the largest economy in the Middle East region, thanks to its huge oil reserves. Like the UAE, the region’s second-largest economy, it is a destination for expatriate workers, who numbered 25 per cent of the population in 2008.

But the population as a whole has increased eight-fold over the last two decades and is expected to continue to grow in tandem with the development of real estate and construction projects. There are around 12 million payment cards in issue in Saudi Arabia, with debit cards comprising around 90 per cent of all cards issued, making Saudi Arabia a natural habitat for prepaid. Aside from payroll, the main opportunity for prepaid in Saudi Arabia is remittances — around $14 billion is remitted per year from Saudi Arabia, compared to $5.4 billion from the UAE.

“Over the next five years, transactions by prepaid mechanisms will account for almost 60 per cent of purchases, globally,” Tilley said.

“In my opinion, prepaid is on the way to become one of the world’s most dynamic and competitive payments sectors. Of course, regulatory and cultural forces mean that individual countries are at different stages of penetration but this is not taking away from the fact that prepaid is booming, worldwide.”

Middle East is seen as the ideal location for expansion of the prepayment sphere, said Tilley. “The MENA region has been fast to recognise the benefits 
of prepaid.

This is due to a multitude of market factors, including the particularly high volume of cash transactions, compared to credit and debit card payments. “In addition, the recent mandate for immigrant workers have to have access to a bank account, also adds impetus. I am encouraged that the market for new payments systems is now wide open, with prepaid cards set to be a major 
force by 2015.”

Tilley said that VRL’s ninth event to focus on prepaid cards, Prepaid Summit: Middle East 2010 is set to bring latest research, news and global speakers to Dubai. “Delegates will be privy to some bullish, fresh data that gives substance to the potential of the sector. We have joined hands with MasterCard and TNS Global to present groundbreaking research on the prepaid market in the region, with a specific focus on the UAE, Saudi Arabia and Egypt,” he said.

Tilley said that the summit will deliver a new perspective from industry leaders, including strategies to protect retail banking customers as well as a bold analysis of the impact of the downturn in the Middle East, and other markets.

sandhya@khaleejtimes.com