Emirates NBD unit takes on Visa and MasterCard with new prepaid card

Network International is taking on payment giants Visa and MasterCard with a new line in prepaid cards aimed at the UAE's blue-collar workers.

Challengers to Visa and MasterCard's dominance in the payment card industry are rare. Antonie Robertson / The National

Network International is taking on the payment giants Visa and MasterCard with a new line in prepaid cards aimed at the UAE's blue-collar workers.

Network, a vendor of card reading equipment based in Dubai and a subsidiary of Emirates NBD, which also counts Abraaj Capital as a major shareholder, is launching its Mercury payment network across the Emirates today.

The Mercury product will be sold to large corporations seeking alternative ways of complying with the Wage Protection System (WPS), the UAE's electronic salary transfer method, which guarantees payment to the bank accounts of migrant labourers.

Prepaid cards are debit cards that are not linked to a bank account but are instead topped up by a customer in a similar manner to a mobile phone.

Using Mercury would mean fewer payments in cash for companies and lower fees for consumers, said Bhairav Trivedi, Network International's chief executive.

"There was a mandate in terms of migrating people on to the WPS product, either a card or account. That was at a very nascent stage," he said.

"It's now at a mature stage where people are familiar with this product and we're now upping the ante and adding new value for the customer."

The product is aimed at giving more "financial inclusion" while also having lower fees than rival prepaid cards offered by Visa or MasterCard, many of which carry charges for loading cash or making payments.

Mercury will allow for the issuance of payroll, gift cards and travel cards, although it will not seek direct sales to individuals at launch.

Currently, Mercury payments can be accepted by just under half of Network's ATMs and card readers, although it cannot be used outside of the Emirates. The company hopes to roll out across the UAE this year.

Challengers to Visa's and MasterCard's dominance in the payment card industry are rare, although the two firms compete with American Express and Diner's Club and newer emerging market players such as China's UnionPay, which have been able to dent their global market share.

Although Network is focused on the domestic market for the time being, Mr Bhairav said Mercury, if successful, had the potential to become a bigger challenger to Visa and MasterCard in the Middle East.

"It could be in the longer run," he said.

"From a shorter-run perspective this is a prepaid product focused specifically on a local market."

The UAE market is a largely cash-driven economy but card use is becoming more and more prevalent, according to a recent report from Euromonitor.

Prepaid cards have grown rapidly during the past five years, with numbers in circulation quadrupling over the period to 1.2 million at the end of last year, reflecting spending of $664.7 million (Dh2.44 billion).

"Areas of strong growth will include Sharia-compliant credit cards for both commercial and personal use and pre-paid cards, with transportation cards, remittance payment cards and gift cards all set to see strong growth," the report said.

"Credit cards, charge cards and debit cards that offer strong rewards programmes, particularly with a focus on high-income consumers and travellers, are also expected to perform well."