'e-dirham' to go private

The Government-issued prepaid debit "e-dirham" card, used by people to pay for state services, is to be handed over to a commercial bank and its services expanded, officials said. The e-dirham is a debit card that has been limited to paying for essential state services, such as immigration fees. The card will now be the responsibility of a bank and a credit-card provider, and its applications extended to the full range of services that are routinely offered by private sector issued debit cards.

"It would work on Visa or MasterCard and the new system will have the capacity to make it a fully fledged prepaid card," said Younis al Khoori, an executive director at the Ministry of Finance. Moving the e-dirham card onto the MasterCard or Visa network would co-brand it in a similar way to which retail credit cards are partnered with banks. The card would most likely bear the Government's insignia on the front and the issuing bank's name on the back. The issuing bank would collect a percentage of each transaction, any fees that consumers pay, as well as increase its deposit base.

It would also help the issuing bank raise its source of fee income at a time when interest income is declining and the banking industry is increasingly seeking means to improve that source. The Government introduced the e-dirham card in 2001 to replace cash payments and stamps. Because its use was limited to 10 ministries, consumers have not been able to use deposited funds for other purchases. No user fees are levied at the moment, and the Ministry has not said whether this will change once the card is outsourced.

Mr Khoori said by handing it over to a bank, the Government freed itself from the day-to-day issues such managing transactions and issuing new cards. He said the name of the partner bank would be announced in mid-February, signalling the selection process is in the final stages. [e-mail]